Oil prices boosted by Saudi Arabia pledge to deepen output cut

Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.

"It was so sudden and so significant, it was just seen as: 'Is this a proactive policy or just a reaction to weak demand?'" said Vivek Dhar, Commonwealth Bank's mining and energy economist.

The cuts, combined with the world's biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.

However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of COVID-19 cases spurring renewed lockdowns.

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Data showing China's April factory prices fell at the sharpest rate in four years also added to investor jitters as it revealed weak industrial demand.

"On the demand side there's probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing," said Commonwealth Bank's Dhar.

Inventory data this week will be key to extending the recent rally in oil prices, analysts said.

U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.