The rise came after crude prices dropped by 3 per cent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russian Federation.
Saudi Arabia will once again shoulder the greatest burden of the OPEC-wide cuts, cutting 500,000 bpd from its December production levels, which stand at an average 10.7 million bpd, the same as in October.
Edward Bell of Emirates NBD bank said "the scale of the cuts. isn't enough to push the market back into deficit" and that he expected "a market surplus of around 1.2 million bpd in Q1 with the new production levels".
Oil futures pared most of their gains on Tuesday as stock markets turned negative on worries about a possible USA government shutdown.
Ericsson says has identified software glitch causing mobile network outages
The outage kicked off around 4.45am this morning, with services that rely on O2's network also suffering as a outcome . O2 chief executive Mark Evans said his teams were working hard with Ericsson to find a swift solution.
"U.S. oil production growth continues relentlessly and will probably continue for the foreseeable future to offset any supply-side adjustments from the OPEC+ group", Razaqzada said.
USA bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from building".
"The more OPEC+ tries to support prices by withholding oil from the market, the more they give the US shale sector an out from rationing supply growth themselves", it added. Since October, 2018 Oil price have dropped by nearly 30%, and this decision is expected help oil producers. The slower economic growth is expected to influence the demand for oil next year and along with the growing production in the U.S., the prices are estimated to decline eventually. An oil output cut would also provide the Iran, as it will be increasing the crude price, supporting the economy of OPEC's third largest producer. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.
Per day, total cut in the oil production is estimated to be more than 1 million barrels.
Kotak Institutional Equities expects a gradual recovery in crude prices from the recent lows, as the proposed curtailment by OPEC and Canada will balance the global oil supply demand in the near term, especially as seasonally weak demand season gets over in Q1CY19.