Oil extends gains as US output cut hopes grow

Oil prices climbed for a second day on Wednesday as hopes US producers would cut output lent support, but gains were capped by growing doubts about Washington’s stimulus package to fight the coronavirus, which continues to spread globally.

Brent crude futures rose $1.26, or 3.4 per cent, to $38.48 a barrel by 0418 GMT, while US West Texas Intermediate (WTI) crude gained $0.91, or 2.7 per cent to $35.27 a barrel. They have recouped nearly a half of the Monday’s 25 per cent loss, which was triggered by the clash of oil titans Saudi Arabia and Russia.

“Expectations that US shale oil producers will need to trim output helped improve the market sentiment,” said Satoru Yoshida, a commodity analyst with Rakuten Securities. US shale producers, including Occidental Petroleum , deepened spending cuts that could reduce production after crude prices slumped to their lowest levels in more than three years.