Oil rose on Wednesday, topping $40 a barrel for the first time since March, supported by lower USA inventories, expectations Opec+ will keep oil output cuts in place and signs of demand recovery from the coronavirus crisis.
Brent crude futures for August were up 41 cents, or 1pc, at $39.98 by 1000 GMT, having earlier touched their highest since March 6 at $40.53.
USA crude oil inventories fell by 483,000 barrels in the week to May 29, the American Petroleum Institute said on Tuesday.
The government's official supply report is due later on Wednesday. West Texas Intermediate (WTI) crude for July CLc1 fell 3 cents, to $36.78.
Russian President Vladimir Putin with Saudi Arabian King Salman bin Abdulaziz al-SaudOPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil production cuts by one month while raising pressure on countries with poor compliance to deepen their output cuts, OPEC+ sources told Reuters.
The Organisation of Petroleum Exporting Countries and its allies led by Russian Federation are moving closer to a compromise on extending current oil output cuts and are discussing a proposal to roll over supply curbs for one to two months. Nigeria and especially Iraq are still well behind and the OPEC+ group may insist that additional cuts for June and July may include what they failed to cut in May.
A conference call between Moscow and nations in the Saudi-led Opec cartel which was originally planned for June 9 has been brought forward to this Thursday in a bid to secure agreement.
"It is the proposal now, but it is yet to be finalised", one OPEC+ source said of the one to two-month extension. "We are on the right track".
Pointing to demand recovery, the services sector in China, the world's second-biggest oil consumer, returned to growth last month, a survey showed.
"As virus-related lockdown measures continue to be lifted, we expect that demand will gradually recover", Capital Economics said in a note, estimating that global oil consumption will fall to just under 92 million bpd on average in 2020.