Investing.com - Oil prices rallied to the highest levels of the session in North American trade on Monday, after Saudi Arabia pledged to make deep cuts to its crude exports in August in an effort to ease a global supply glut.
Saudi Arabia, OPEC’s largest producer, will limit exports to 6.6 million barrels a day in August, energy minister Khalid Al-Falih said after a meeting with fellow producers who gathered to discuss compliance with the cartel's deal to cut production.
The oil ministers gathering in St. Petersburg, Russia, made no major changes to their wider supply agreement, stopping short of capping output of Libya and Nigeria.
However, multiple reports said Nigeria committed to voluntarily taking part in cuts if it reaches a production level of 1.8 million barrels a day. Libya, which has increased output above 1 million barrels a day, is not planning to limit production until reaching its target of pumping 1.25 million a day.
The two countries had been exempted from the pact among major oil producers to allow their production to recover from years of unrest.
In May, OPEC and some non-OPEC producers, such as Russia, extended an agreement to slash 1.8 million barrels per day in supply until March 2018.
Energy ministers at the meeting said the output-cap agreement could be extended beyond next year’s first quarter if needed, according to multiple reports.
The U.S. West Texas Intermediate crude September contract was at $46.22 a barrel by 7:05AM ET (1105GMT), up 45 cents, or around 1%. It touched its lowest since July 13 at $45.41 earlier in the session.
Elsewhere, Brent oil for September delivery on the ICE Futures Exchange in London rose 53 cents, or about 1.1%, to $48.59 a barrel, after touching a more than one-week low of $47.70 in overnight trade.
WTI posted a nearly 1.7% decline last week, while Brent lost about 1.8%, as sentiment soured amid indications that supply from OPEC was set to rise, despite the cartel's agreement to curb production.
Meanwhile, in the U.S., weekly figures from energy services company Baker Hughes showed that the number of active rigs drilling for oil declined by 1 to 764 last week, suggesting early signs of moderating domestic production growth.
The count is often seen as proxy for the outlook on domestic production.
In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.