OIL prices have risen after Saudi Arabia agreed to cut production again to help offset the dramatic fall in demand caused by the coronavirus.

Brent crude traded at $30.32 per barrel yesterday afternoon, up $0.69/bbl on the day , as traders welcomed Saudi Arabia’s decision to reduce daily production by a further one million barrels from June.

The move encouraged the UAE and Kuwait to cut output by a further 100,000 and 80,000 barrels daily respectively.

It boosted hopes the oil market may finally be on the road to some sort of recovery after months of turmoil.

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Brent crude fell to an 18-year low of less than $20/bbl last month when oil prices turned negative in the US briefly amid fears that storage capacity would run out.

The latest reductions came on top of the record production cuts agreed by members of the Opec + grouping including Saudi Arabia and Russia in April. The cuts, which totalled 9.7m barrels daily, took effect this month.

Sector watchers yesterday noted signs that demand has started to recover following moves by countries around the world to ease lockdowns they imposed to slow the spread of the coronavirus.

“Oil demand is now coming back from the abyss in March and April 2020 as we get gradual reopening,” said Bjarne Schieldrop, chief commodities analyst at Scandinavian bank SEB.

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Signs of recovery will be welcomed in the North Sea, where firms are facing huge financial and logistical challenges.Trade body Oil & Gas UK said last month the North Sea industry had been left at breaking point following dramatic falls in oil and gas prices. Brent crude sold for around $70/bbl in January.

Mr Schieldrop warned demand could fall again if there are renewed virus outbreaks.

West Texas Intermediate crude sold for $25.94 yesterday afternoon, up 7.5%, or $1.80/bbl.