Oil prices rally on Saudi report

World oil prices rebounded today on reports that OPEC kingpin Saudi Arabia had cut its oil supplies last month, dealers said.
Brent North Sea crude for December advanced USD 1.77 to USD 86.48 a barrel in late afternoon deals in London.
US benchmark West Texas Intermediate for December delivery gained USD 1.34 to USD 81.86 a barrel compared with yesterday's close.
"Oil prices saw a strong turnaround today on the news Saudi Arabia cut its crude supply to the market in September, and signs from China and Germany that the global growth situation maybe not as gloomy as expected," said CMC Markets analyst Jasper Lawler.

The market also bounced back after sharp losses the previous day that were sparked by surging crude stockpiles in the United States.
"The ongoing large builds in crude oil inventories continue to dominate the oil market, setting a bearish tone and weighing heavily on market sentiment," said Sucden analyst Myrto Sokou.

"The bearish oil fundamentals verify the slowdown in the US oil demand, following the recent tepid US macroeconomic data."
The oil market won further support today after news that China's key manufacturing sector picked up slightly, but analysts said prices remain burdened by a supply glut.
Crude futures had fallen Wednesday as US stockpiles surged again, with WTI falling nearly $2 a barrel to its lowest closing level since June 2012.

The US Department of Energy (DoE) reported yesterday that American oil inventories surged by 7.1 million barrels in the week to October 17, more than double market expectations.
US stocks of distillates, including heating fuel, rose by one million barrels, confounding forecasts for a drop of 1.5 million barrels.
Reserves of gasoline meanwhile dipped 1.3 million barrels, broadly in line with expectations.
"The main culprit was undoubtedly the weekly inventories data released by the US Department of Energy," said Capital Spreads dealer Jonathan Sudaria in reference to Wednesday's selloff.
"On top of that, the US dollar strengthened which exacerbated the selloff.