Oil prices rally as Saudi supply cut begins

Global crude oil futures closed more than 2% higher on Monday as Saudi Arabia has begun voluntary supply cuts starting from February 1. The de-facto leader of the Organization of Petroleum Exporting Countries (OPEC) had announced that it would reduce oil production by 1 million barrels in February and March.

That is to say, tighter supply outlook outweighed the near-term demand concerns led by the pandemic. West Texas Intermediate crude for March rose $1.35 to settle at $53.55/bbl while Brent oil for April delivery settled up $1.31 at $56.35/bbl on Monday.

Both crude oil benchmarks were trading 1% higher during an intraday trading on Tuesday at the time of writing.

According to the weekly average of ChemOrbis Price Wizard, crude oil futures are now hovering at around a year-high.