Oil gains as U.S. shale output set to decline
Oil gained more than 1% on Tuesday as the U.S. energy forecasting agency said that shale output would have a record decline in April, adding to production cuts agreed between other major oil producers.
Brent futures gained 1.7%, or 53 cents, at $32.27 per barrel. U.S. West Texas Intermediate crude rose 1.4%, or 32 cents, at $22.73 per barrel.
OPEC and its allies including Russia decided to cut oil production by 9.7 million bpd in May and June, which was 10% of the global supply before the coronavirus crisis.
The United States and other non-OPEC oil producers are also planning to cut output to 19.5 million bpd.
However, oil executives and analysts believe that the production cut is not enough to counter the impact on global oil demand.
U.S. shale oil production will likely suffer its steepest monthly decline in April, according to the forecast by the Energy Information Administration.
Oil output has been sinking in recent months, but declines are anticipated to worsen in April. Moreover, the energy agency expects a 200,000 bpd cut.
Major U.S. producers like Chevron and Exxon Mobil have also announced a cut in expenditure and less crude production in the next months.