Oil prices rose on Wednesday, with Brent prices hitting a peak last seen 11 months ago, after Saudi Arabia surprised markets with a large cut in crude production.
Brent crude for March settlement rose 1.1 percent to $54.20 after climbing 4.9 percent on Tuesday. West Texas Intermediate futures for February delivery were up 0.7 percent at $50.30.
The de facto leader of the Organization of the Petroleum Exporting Countries has pledged to cut crude production by 1 million barrel per day from February through March as a rampant coronavirus leads to more lockdowns.
By agreeing to make bigger output cuts, Saudi Arabia tried to compensate for a modest increase in output from Russia and Kazakhstan.
Saudi Energy Minister Prince Abdulaziz bin Salman said hat the extra reduction was intended to support the country’s economy and the oil market.
Russia’s deputy prime minister described the Saudi pledge as a “new year gift” to the oil market.
Meanwhile, the American Petroleum Institute reported that U.S. crude inventories fell by 1.663 million barrels last week, after a draw of 4.785 million barrels the previous week. However, there were sharp jumps in gasoline and distillates stockpiles.