Oil prices gained support as China’s crude imports hit an all-time high last month. Credit: Schmucki from Pixabay.

Oil prices have edged up after the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+, agreed to extend output cuts to the end of next month.

Brent crude rose $0.51 at $42.81 per barrel, while US West Texas Intermediate (WTI) crude increased $0.32 to $39.87 a barrel, Reuters reported.

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Prices also gained some support as China’s crude imports hit an all-time high last month.

In April this year, OPEC+ agreed to cut output by 9.7 million barrels per day (bpd) during May-June with an aim to increase prices that collapsed following the global Covid-19 pandemic.

Saudi Arabia increased its monthly crude prices for next month, following the extension.

Singapore bank OCBC economist Howie Lee told the news agency that the latest agreement had fallen short of market expectations for an extension of output cuts for three months.

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Lee further added that the move is, however, expected to lead to a supply deficit by October this year.

Analysts said that market participants are currently eyeing compliance among OPEC members such as Iraq and Nigeria, which produced more in May and June.

Meanwhile, supply in Libya is also expected to increase as two major oilfields have reopened after months of a blockade that closed majority of the country’s production.

RBC Capital Markets global commodity strategy Helima Croft said: “The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.”

Data from Baker Hughes has revealed that number of operating oil and natural gas rigs in the country declined.

Furthermore, following the entry of tropical storm Cristobal into the Gulf of Mexico, nearly 30% of US offshore oil output was closed.