WL: Oil rises from one-month low as Saudi cuts counter U.S. output
NEW YORK (Bloomberg) -- Oil advanced from the lowest level in a month as investors weighed production cuts from Saudi Arabia and other OPEC members against a projected gain in U.S. crude output.
Futures gained as much as 1% in New York after dropping 5.9% the previous two sessions. Saudi Arabia was said to reduce February crude sales to China and southern Asian nations as it curbs supply in accordance with a deal between OPEC and other producers. The Energy Information Administration increased its forecast for U.S. production this year before a separate report Wednesday that is estimated to show crude inventories rose last week.
The EIAâ€™s upward revision comes after the Organization of Petroleum Exporting Countries and 11 other nations agreed to curb output to trim a global supply glut, helping to push crude to an almost 18-month high in December. The price increase is luring non-OPEC producers back into the market. U.S. drillers added rigs for the 10th straight week, the longest run of gains since August 2011.
â€śFew envision that Brent crude at sub-$50 is a viable price in the first half of 2017 amid OPEC production cuts tightening up the market,â€ť said Bjarne Schieldrop, chief commodities analyst at SEB AB bank in Oslo.
West Texas Intermediate for February delivery gained as much as 51 cents to $51.33/bbl on the New York Mercantile Exchange and was at $51.27 at 10:15 a.m. in London. Total volume traded was about 18% below the 100-day average. The contract declined $1.14 to $50.82 on Tuesday.
Brent for March settlement rose as much as 62 cents, or 1.2%, to $54.26/bbl on the London-based ICE Futures Europe exchange. The contract lost $1.30, or 2.4%, to $53.64 on Tuesday. The global benchmark was at a premium of $2.04 to March WTI.
Two Southeast Asian refiners received cuts of about 30% from Saudi Arabia, according to two people with knowledge of the matter who asked not to be identified because the information is confidential. Reductions to a buyer in India were about 20%, one of the people said.