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Oil prices climbed by more than $1 a barrel on Tuesday on hopes that major crude producers will agree to extend output cuts during a video conference expected to be held this week and as countries and U.S. states begin to reopen after coronavirus lockdowns.

Brent crude settled at $39.57 a barrel, rising $1.25, or 3.3 per cent. U.S. West Texas Intermediate crude (WTI) settled at $36.81 a barrel, jumping $1.37, or 3.9 per cent.

Both benchmarks neared three-week highs.

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“There’s the anticipation that OPEC+ is going to agree to extend their current levels for another two months, and at the same time, the market anticipates that the reopening of economies around the world will increase demand and will get us in a position such that, by August, the oil market will be in balance,” said Andy Lipow, president of consultants Lipow Oil Associates.

The Organization of the Petroleum Exporting Countries and others including Russia, a grouping known as OPEC+, are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10 per cent of global output, into July or August, at a meeting expected to be held on Thursday.

Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.

Saudi Arabia has been pushing to keep the deeper cuts in place longer, sources said.

The gradual reopening of businesses in a growing number of U.S. states and countries after shelter-in-place mandates caused by the coronavirus pandemic also boosted fuel demand and aided oil prices.

U.S. crude inventories fell by 483,000 barrels in the week to May 29 to 531 million barrels, compared with analysts’ expectations for a build of 3 million barrels, data from industry group the American Petroleum Institute showed.

Official data will be released on Wednesday.

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