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Oil rises after Saudi output pledge, declining U.S. inventories

Reuters  |  NEW YORK 

By Scott DiSavino

NEW YORK (Reuters) - Oil prices rose on Wednesday after top exporter said it would cut crude exports and deliver an even deeper cut to its production, and after an group reported a surprise decline in U.S.

Brent crude, the global benchmark, was up $1.07, or 1.7 percent, at $63.49 a barrel at 9:55 a.m. EST (14:55 GMT), while U.S. Intermediate futures were up 91 cents, or 1.7 percent, at $54.01.

"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."

On Tuesday, the (API) said U.S. crude inventories fell by 998,000 barrels in the latest week, trouncing forecasts by analysts in a poll for a rise of 2.7 million barrels.

The (EIA) is scheduled to release its weekly data at 10:30 a.m. EST (1530 GMT) on Wednesday.

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

The growth, led by U.S. shale oil output, has built up global inventories of crude and refined products. Refining margins for gasoline have collapsed.

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

On Tuesday, Saudi told production would fall below 10 million bpd in March, more than half a million bpd below the target it agreed to.

U.S. restrictions on Venezuela's should remove some 330,000 bpd in supply this year, according to

The has risen by 20 percent so far this year, yet most of that increase came 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 should still outstrip demand this year.

"Oil prices 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

(Reporting by in London and Henning Gloystein in Singapore; Editing by Alexandra Hudson, and David Gregorio)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 20:50 IST
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