Oil rises to $67 on cuts to Saudi, Venezuelan exports

Brittany Sowacke  Bloomberg News

Oil futures rallied about 2 percent on Wednesday as USA crude inventories unexpectedly fell and an official forecast of crude oil supply growth from the world's top producer was revised lower.

Saudi Arabia has voluntarily cut its supply by more than the deal requires and in April will keep output well below 10 million barrels per day (bpd), the Saudi official said - less than the 10.311 million bpd that the kingdom had agreed to pump.

Crude inventories fell by 3.9 million barrels in the last week, compared with analysts' expectations for an increase of 2.7 million barrels.

Oil prices rose on Tuesday, lifted by healthy demand and output cuts led by producer group OPEC.

Crude oil prices have been trending higher today on the back of falling Venezuelan and Iranian production, squeezed by USA sanctions, and also thanks to an update from Saudi Arabia that it plans to continue cutting its production deeper than it agreed on last December to support prices.

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.99 per barrel at 0012 GMT, up 20 cents, or 0.4 percent, from their last settlement. "It looks very supportive as refiners come out of maintenance".

That's up from an average of around 11 million bpd in 2018. Brent touched $67.39 a barrel on Monday, its highest since February 25.

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"While the revision is small, the comforting part for bulls was that the direction of the revision was down rather than up", Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.

According to an annual five-year outlook report by the International Energy Agency, the USA became the world's top oil producer in 2018, and is set to become the world's biggest oil exporter over the next five years.

Venezuela's opposition-run congress on Monday declared a "state of alarm" over a five-day power blackout that has crippled the country's oil exports and left millions of citizens scrambling to find food and water.

India has already built 5.33 million tons of underground reserves in three locations, which can meet 9.5 days of the country's oil needs.

At least partly offsetting OPEC efforts to tighten the market and disruptions like Venezuela is a surge in USA oil supply.

Total gross exports of crude and petroleum products will surge to 9m bpd.

Energy Minister Khalid al-Falih, the previous day, said the production-curbing agreement would likely last until at least June.

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