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Oil gets a boost from Saudi output pledge, declining U.S. inventories

Reuters  |  LONDON 

By Amanda Cooper

LONDON (Reuters) - Brent rose on Wednesday, after top exporter said it would cut crude exports and deliver an even deeper cut to its production, while U.S. futures gained on a decline in domestic

futures rose 88 cents to $63.30 a barrel by 0950 GMT, while U.S. gained 66 cents to trade at $53.76 a barrel.

"The feel-good factor is back in play but are by no means out of the woods yet," said.

"It is a well-known fact that the world is losing momentum amid a plethora of downside risks including lingering US-trade tensions and geopolitical uncertainty."

The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that it had cut its output by almost 800,000 bpd in January to 30.81 million bpd.

Most of that reduction has been thanks to on Tuesday told production would fall below 10 million bpd in March, more than half a million bpd below the target it agreed to as part of a global deal to limit supply.

U.S. restrictions on Venezuela's have crippled exports and threaten to remove some 330,000 bpd in supply from the market this year, according to

The has risen by 20 percent so far this year, yet most of that increase materialised in early January, before the imposition of U.S. sanctions on Venezuela's

The global remains well supplied, said in its monthly market report on Wednesday and output would still likely outstrip demand this year, despite OPEC's efforts and U.S. sanctions on and

"have not increased alarmingly because the market is still working off the surpluses built up in the second half of 2018," the IEA said.

"In quantity terms, in 2019, the U.S. alone will grow its by more than Venezuela's current output. In quality terms, it is more complicated. Quality matters."

has tried to find alternative customers, especially in Asia, but under U.S. pressure many buyers there are also shying away from dealing with

In the United States, crude inventories fell by 998,000 barrels in the latest week, trouncing forecasts for a rise of 2.7 million barrels, according to data from industry group the on Tuesday.

U.S. crude output is expected to grow by 1.45 million bpd this year and by another 790,000 bpd next year to hit 13 million bpd in 2020, according to the

The rapid growth in U.S. production, led by shale oil output, has led to an unwelcome build in inventories of crude and refined products, while refining margins for the gasoline it yields have collapsed around the world.

(Reporting by Henning Gloystein; Editing by and Alexandra Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 15:36 IST