Oil gains 1% after Saudi Arabia pledges more output cuts

NEW YORK — Oil prices rose more than one percent on Tuesday after the Organization of the Petroleum Exporting Countries (OPEC) figures showed it cut production sharply in January, and as lead member Saudi Arabia said it would reduce its output in March by an additional 500,000 barrels.

Growing investor optimism for a breakthrough in the latest round of US-China trade discussions also boosted futures as members of both sides met in Beijing.

Brent crude futures gained 91 cents or 1.5% to settle at $62.42 a barrel. US West Texas Intermediate (WTI) crude oil futures rose 69 cents or 1.3% to settle at $53.10 a barrel.

US STOCKPILES FALL

Oil prices edged up slightly postsettlement after data from industry group American Petroleum Institute (API) showed US crude oil stockpiles had unexpectedly fallen. Crude inventories fell by 998,000 barrels in the week ended Feb. 8 to 447.2 million, com- pared with analysts’ expectations for an increase of 2.7 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 502,000 barrels, API said.

Production cuts effective to the end of June by OPEC and allies led by Russia have tightened markets despite rising output in non-member countries, primarily the US.

OPEC said on Tuesday it had reduced oil production almost 800,000 bpd in January to 30.81 million barrels per day ( bpd) under its voluntary global supply pact.

SAUDI FACTOR

Saudi Arabia Energy Minister Khalid al-Falih told the Financial Times that the country would cut production to about 9.8 million bpd in March to bolster prices.

As part of the OPEC deal, that nation pledged to cut output to about 10.3 million bpd.

“The market was bid on the OPEC report, the OPEC numbers themselves, and Saudi Arabia bringing the production numbers down pretty good,” said Bob Yawger, director of energy futures at Mizuho.

Investors were also hopeful that a new round of US-China talks this week would bring the two sides close to resolving their ongoing trade war ahead of a March 1 deadline, Mr. Yawger said.

US President Donald Trump said he could push off the deadline to hike tariffs on Chinese imports if the two countries get close enough to striking a deal.

The Energy Information Administration said on Tuesday it expected US crude production to hit a new record of 13.2 million bpd through 2020, which took some steam out of the rally, traders said. —