Oil prices rose on Tuesday after US President Donald Trump said producers are considering cutting 20 million barrels per day – more than double the figure publicly announced – to help the virus-hit sector.
US benchmark West Texas Intermediate rose nearly 2% to trade at $22.85, while international benchmark Brent crude climbed 1.5% to trade at $32.26.
OPEC producers dominated by Saudi Arabia and allies led by Russia thrashed out a compromise deal on Sunday to cut production by nearly 10 million barrels per day from May.
The agreement was aimed at boosting prices after months of heavy falls, with the Covid-19 outbreak sapping demand as countries around the world have put their populations under lockdown.
A Saudi-Russian price war compounded the crisis, with both countries ramping up production as they bid to hold on to market share and undercut US shale producers.
Prices fluctuated after the output cut was announced, however, with traders still nervous about a supply glut amid estimates that demand has plunged 25 million barrels per day.
Trump said on Monday that the cuts may be deeper than the headline figure – with top producers considering slashing output by 20 million barrels a day under the deal.
“People are saying 10 million but we think the number they will actually hit is going to be closer to 20 million barrels a day,” Trump said at a press briefing about the coronavirus, referring to how much oil production would be cut.
He did not go into specifics.
Stephen Innes, Chief Global Market Strategist at AxiCorp, said that attention was still firmly on how much demand would collapse due to the pandemic.
“That has yet to be quantified and means there are still downside risks to oil,” he said.