Crude oil prices jumped 4% on Tuesday after the U.S. cut output forecasts. Saudi Arabia, Russia and other major producers are also working together to support the market.
Oil was further supported by a weakening dollar and predictions that oil rig counts in the U.S. would tumble this week. Last week, there was a sharp and surprising decline of 26 rigs.
Brent was up 4%, or $2, to $51.25a barrel. Technical buying for Brent was also up above $50 per barrel, making this the first three-day gain in several months.
In the U.S., West Texas Intermediate (WTI), was up 3.6%, or $1.64, to $47.90.
The U.S. Energy Information Administration announced on Tuesday that crude output would decline through mid-2016. It also raised its forecast for 2016 world oil demand rising270,000 barrels per day to 95.2 million barrels per day.
Officials from Russia and Saudi Arabia discussed oil in a meeting last week, and will continue to work together. It’s being speculated that non-OPEC and OPEC countries will come to an agreement on cooperation. It’s possible that the market is movingbecause of this speculation.
Former head of EOG Resources (EOG) stated at a recent conference that oil production in the U.S. would start to decline in October and early next year because of weak prices.