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

Opec oil production falls as Saudi Arabia slashes output

Brent crude futures were up $0.77 at $63.19 a barrel by 1225 GMT while U.S. crude oil futures rose $0.53 to $53.63 a barrel.

Brent crude, the world's oil benchmark, increased 3 percent to $63.32 a barrel after the report was released today.

American supply growth this year will exceed Venezuela's total output, the IEA said, another signal that OPEC's efforts to buoy prices may ultimately prove self-defeating.

"Initial production and supply data from participating countries is beginning to show various levels of conformity, as can be viewed in OPEC's latest Monthly Oil Market Report".

But there are indications that crude supply is beginning to decrease.

None of these options are appealing, and all of them are likely to result in higher costs for refined products, particularly the middle distillates such as diesel and jet fuel that are produced in greater quantities from heavy crudes.

"We believe that oil is not pricing in supply-side risks lately as markets are now focused on U.S". This would help the oil-rich, but cash-poor, country dilute its extra heavy oil for export around the world. "Reports are emerging that PDVSA is scrambling to secure new markets for its crude, after the U.S. placed additional sanctions on the country", ANZ bank said on Monday.

"The imposition of sanctions by the United States against Venezuela's state oil company Petroleos de Venezuela (PDVSA) is another reminder of the huge importance for oil of political events", the IEA said.

Should U.S. -China talks to end trade disputes between the two nations have a positive outcome, the bank said oil markets would "switch attention from macro concerns impacting future demand growth to physical tightness and geopolitical risks impacting immediate supply". "In quality terms, it is more complicated".

WTI prices were also weighed down by the closure of a 120,000 barrels per day (bpd) crude distillation unit (CDU) at Phillips 66's Wood River, Illinois, refinery following a fire on Sunday.

Oil climbed for a second day after Saudi Arabia pledged to deepen production cuts and U.S. President Donald Trump said he might extend a deadline for additional tariffs on China. Venezuela, Libya and Iran are exempt from production cuts.

OPEC is partnering with 10 non-member nations, including Russian Federation, to keep 1.2 million bpd off the market.

Most analysts expect that the OPEC+ supply curtailment deal will ultimately rebalance supply and demand and provide support for higher oil prices.

The Organization of the Petroleum Exporting Countries (OPEC), which Saudi Arabia de-facto leads as the world's top crude oil exporter, said on Tuesday that it had cut its output by nearly 800,000 bpd in January to 30.81 million bpd.

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