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Oil up on strong demand, Saudi comments


Reuters NEW YORK
By Ayenat Mersie
NEW YORK (Reuters) - Oil rose on Monday, hitting a two-and-a-half-week high, supported by strong U.S. demand and comments from Saudi Arabia that it would continue to curb production in line with OPEC-led efforts.
Brent crude rose 20 cents to $67.51 a barrel at 11:35 a.m. (1635 GMT), after rising almost 4 percent last week. U.S. West Texas Intermediate futures rose 41 cents to $63.96 a barrel after rising 3 percent last week.
Both contracts earlier rose to their highest since Feb. 7.
Prices were supported by Saudi Energy Minister Khalid al-Falih, who said on Saturday the country's crude production in January-March would be well below output caps, with exports averaging less than 7 million barrels per day.
He said Saudi Arabia hoped OPEC and its allies would be able to relax output curbs next year and create a permanent framework to stabilise oil markets after the current agreement on supply cuts ends this year.
"A study is taking place and once we know exactly what balancing the market will entail, we will announce what is the next step. The next step may be easing of the production constraints," he told reporters in New Delhi.
The possibility of an eventual end to production cuts, however, may be a bearish development longer-term, said Bob Yawger, director of energy futures at Mizuho.
Data released last week by the U.S. Energy Information Administration showed a surprise draw in crude inventories.
"Last week's inventory report wasn't bullish, but it also wasn't bearish. And that got the bulls excited," said Bill Baruch, president of Blue Line Futures in Chicago.
"Historically, this is usually a transitory kind of lull, where demand tapers back, we haven't seen that yet."
Demand in Europe may also be getting some help. A cold snap across the continent has encouraged some refiners to delay maintenance, which could support demand and help end a bout of profit-taking, analysts said.
"Our view is demand will be strong enough, but we don't see a big breakout," said Natixis oil analyst Joel Hancock, adding the expected a price in the range of $60 to $70 this year.
Still, hedge funds and money managers upped their bullish wagers on U.S. crude oil for the first time in four weeks, data showed on Friday.
Meanwhile, Libya's National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield after a protest by guards closed the field.
(Additional reporting by Amanda Cooper in London and Osamu Tsukimori in Tokyo; Editing by Edmund Blair and Alistair Bell)

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First Published: Feb 26 2018 | 10:33 PM IST

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