Saudi Arabia said to cut oil output to lowest since January

With the increasing rig count pointing to rising supply, Tony Headrick, energy market analyst at CHS Hedging, said OPEC would be watching.

The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017.

Brent for June settlement was 16 cents higher at $56.39 a barrel on the London-based ICE Futures Europe exchange.

The report also showed that gasoline inventories decreased by 2.973 million barrels, compared to expectations for a draw of 1.721 million barrels, while distillate stockpiles fell by 2.153 million barrels, compared to forecasts for a decline of 0.885 million.

Demand for oil from OPEC is seen growing by 600,000 bpd from 2016, to 32.2 million barrels daily.

Saudi Arabia is reported to have reduced its output by almost 4.5%.

Latest OPEC data showed members had cut March output beyond what they had promised.

A rise in geopolitical tensions and potential supply disruptions overshadowed concerns that rising levels of global oil supply, particular in the USA, would dampen OPEC's effort to drain the glut in supply.

Lewis Hamilton wins Chinese Formula One GP
Red Bull's Max Verstappen , who started the race in 16th place, was able to speed into third. Raikkonen, who rejoined Ferrari in 2014, signed a one-year contract extension last year.

"OPEC's compliance has been more than anticipated", an OPEC delegate said.

Previously benchmark USA and United Kingdom crude futures have risen for five-straight sessions, based on NY settlement levels, the longest such run since mid-August and fallen just once the past two weeks. Early in the day, prices had retreated on expectations US inventories could climb again.

A Reuters poll of analysts forecast a rise in USA crude inventories for a fourth straight week.

Market watchers have long maintained that producers need to extend their production cut if they hope to make a dent in the global inventories.

US West Texas Intermediate (WTI) crude futures were up 18 cents, or 0.34 per cent, at $53.58 a barrel, also their highest since early March.

OPEC and other producers, including Russian Federation, have pledged to cut output by around 1.8 million barrels per day during the first half of 2017 to control oversupply.

Official U.S. production and inventory data will be published later on Wednesday by the EIA.

"Higher demand for oil products will encourage refiners to maximise throughputs following the end of the spring maintenance season..."

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