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Oil up nearly 3 percent on Saudi and OPEC cuts

Reuters  |  LONDON 

By Browning

(Reuters) - prices gained nearly 3 percent on Tuesday, supported by OPEC-led production cuts, which said it would surpass by more than half a million barrels per day (bpd), and by sanctions against Iran and

Brent crude futures were up $1.65, or 2.7 percent, at $63.16 a barrel by 1445 GMT. Intermediate (WTI) futures also gained 2.7 percent, rising by $1.40 to $53.81.

Markets are tightening because of voluntary production cuts from Jan. 1, led by the Organization of the Petroleum Exporting Countries and allies including Russia, aimed at forestalling a global overhang.

Saudi Arabia, the world's top exporter and de facto of OPEC, said it would reduce crude production to about 9.8 million bpd in March, over half a million bpd more than it had originally pledged.

Minister announced the move in an interview with published on Tuesday as the kingdom seeks to drive up to help to fund an economic transformation plan.

However, rising oil production, fighting near Libya's main oilfield, sanctions on and suspense over whether will grant more waivers to import Iranian oil have left markets unsure about broader supply.

OPEC cut its forecast for 2019 world on Tuesday, citing slowing economies and expectations of faster supply growth from rivals, underlining the challenge it faces in preventing a glut.

Also on the radar are hopes expressed by U.S. and Chinese officials that a new round of talks, which began in on Monday, would bring them closer to easing their months-long trade war.

and are trying to hammer out a deal before a March 1 deadline, without which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.

The suspense over the talks continues to affect

"Resumption of the U.S.-trade talks has prompted risk appetite in financial markets, which has also manifested in gaining strength," said Abhishek Kumar, analyst at Interfax in

"Nevertheless, there needs to be a tangible outcome from the talks for a sustained rally in prices."

Bank of America, however, has warned of a "significant slowing" in global growth, adding that it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019 and $65 and $60 in 2020.

(Reporting by Browning; Additional reporting by Henning Gloystein; Editing by and Dale Hudson)

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

First Published: Tue, February 12 2019. 20:28 IST