Oil gains 2 percent as Saudi Arabia readies more supply cuts

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That said, Crude's price remains considerably lower than its altitude in October when it traded north of $75.00.

The Paris-based organisation said that OPEC crude output dropped by 0.93 million barrels per day (mbd) to 30.83 mbd in January.

"The 90-day truce (on trade) agreed in December will run out on March 1, but given the progress of the talks there could be an extension, which is why there are rising optimism that the two leaders will meet later that month", said Alfonso Esparza, senior market analyst, OANDA. The growth, led by USA shale oil output, has built up global inventories of crude and refined products.

Venezuela's production has nearly halved in two years to 1.17 million bpd, as an economic crisis decimated its energy industry and USA sanctions have now crippled its exports. In another bullish sign, USA inventories were said to have fallen last week before government data due Wednesday.

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Brent crude futures LCOc1 have risen 20 percent in 2019 to around $63 a barrel, but most of that increase took place in early January.

Oil prices also drew support from a surprise increase in China's exports in January and a sharp rise in imports of crude oil before the Lunar New Year holidays in February.

Global oil cartel Opec said Tuesday it sharply reduced crude oil production last month, after heavyweight Saudia Arabia slashed output and exports fell in crisis-hit Venezuela.

In 2019, world oil demand growth was revised lower by 0.05 mb/d and is now forecast at 1.24 mb/d, as a result of downward revisions to the economic outlook for major economies.

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On the flip side, the analyst is cautious on his outlook for oil prices in the second half of 2019 due to low-priced US shale production that will come on line.

"In quantity terms, in 2019, the U.S. alone will grow its crude oil production by more than Venezuela's current output. Saudi Arabia, are intending to push more barrels into the market to offset shortfalls" of heavier grades of crude, the IEA warned.

One key uncertainty in the crude oil market is Venezuela. Refining margins for gasoline have collapsed.

Although the US reimposed oil export sanctions last November, it gave a six-month exemption or wavier to eight friendly countries: China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece to continue buying a restricted quantity of Iranian oil, but it is uncertain if Washington will extend the waivers beyond May. In quality terms, it is more complicated.

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China's trade surplus with the United States narrowed to US$27.3 billion in January, from US$29.87 billion in December. The source added that the Chinese delegation may leave Beijing on Tuesday.