Oil Prices Rally 2% As OPEC Supply Cuts Deepen; API Data Eyed

12 Feb 2019

Oil Prices Rally 2% As OPEC Supply Cuts Deepen; API Data Eyed

Oil prices rallied on Tuesday, after OPEC significantly reduced its crude output in January, making good on its latest deal to curb production and stave off a global glut in supplies.

U.S. West Texas Intermediate crude futures for March delivery on the New York Mercantile Exchange jumped $1.38, or around 2.6%, to $53.78 a barrel by 8:20AM ET (13:20 GMT).

Elsewhere, Brent oil for April delivery on the ICE (NYSE:ICE) Futures Exchange in London rose $1.51, or about 2.4%, to $63.01 a barrel.

In its closely watched monthly report, the Organization of the Petroleum Exporting Countries said its oil production had fallen by 797,000 barrels a day in January to 30.81 million barrels per day (bpd).

The bulk of the cuts were shouldered by Saudi Arabia, the world's top oil exporter and de facto leader of OPEC. The kingdom pumped about 10.2 million bpd in January, down 350,000 bpd from December.

Riyadh will continue to cut production, reducing output to about 9.8 million bpd in March, Saudi Energy Minister Khalid al-Falih told the Financial Times in an article published on Tuesday.

In December, OPEC and a group of 10 producers outside the cartel, led by Russia, agreed to collectively cut production by a total of 1.2 million bpd during the first six months of 2019.

Oil's gains also came as appetite for riskier assets improved after lawmakers reached a tentative deal to avert another partial U.S. government shutdown and the U.S. and China expressed optimism about their ongoing trade talks.

Market players looked ahead to the release of fresh weekly data on U.S. commercial crude inventories.

The American Petroleum Institute is due to release its weekly report for the week ended Jan. 25 at 4:30PM ET (21:30 GMT).

The U.S. Energy Information Administration's weekly report will be released on Wednesday.

In other energy trading, gasoline futures climbed 2.6% to $1.455 a gallon, while heating oil added 1.5% to $1.921 a gallon.

Natural gas futures tacked on 1.3% to $2.678 per million British thermal units.

-- Reuters contributed to this report

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