Oil Jumps 5% as Saudi Pledge to Cut Output

Futures in New York edged lower after jumping 4.9% at $49.93 per barrel on Tuesday and briefly topping $50 a barrel for the first time since February. OPEC+ reached an agreement following two days of talks to curb supply over the next two months.

New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled up $2.33, or 4.9%, at $49.93 per barrel. Its peak for the session was $50.20, the highest it has reached since February. On Monday, WTI fell almost 2% as trading for 2021 began, extending its 21% loss from last year.

London-traded Brent, the global benchmark for crude, was up $2.55, or 5%, to $53.64 by 2:40 PM ET (19:40 GMT).

Saudi Arabia pledged to cut output by 1 million barrels a day from January levels to offset a rise in output from OPEC+, led by Russia and Kazakhstan. The agreement allows Russia and Kazakhstan to lift production by 75,000 bpd in February from January levels and another 75,000 bpd in March.

“Demand is still about 78 million barrels a day, about 20% lower than what it should be,” said John Kilduff, founding partner at New York-based energy hedge fund Again Capital. “The demand number will be contingent on the virus situation, given that you have new lockdowns in the U.K., Germany and other places.”