Brent oil rises to highest since February after Saudi Arabia output cut

TOKYO, Jan 6 (Reuters) - Brent oil prices rose on Wednesday
to the highest since February after Saudi Arabia agreed to make
bigger cuts in output than expected during a meeting with allied
producers, while industry data showed U.S. crude stockpiles fell
last week.
Brent crude LCO1c rose as much as 0.6% to $53.94 a barrel,
the highest since Feb. 26, 2020. It was at $53.79 a barrel at
0147 GMT and gained 4.9% on Tuesday.
U.S. West Texas Intermediate (WTI) futures CLc1 gained 13
cents, or 0.26%, to $50.06 a barrel. The contract on Tuesday
closed up 4.6% at $49.93, its highest since Feb. 24, 2020.
Saudi Arabia, the world's biggest oil exporter, agreed on
Tuesday to make additional, voluntary oil output cuts of 1
million barrels per day (bpd) in February and March, after a
meeting with the Organization of the Petroleum Exporting
Countries (OPEC) and other major producers that form the group
known as OPEC+.
The reductions agreed by Saudi Arabia were included in a
deal to persuade other producers in the OPEC+ group to hold
output steady.
With coronavirus infections spreading rapidly in many parts
of the world producers are trying to support prices as demand
takes a hit from new lockdowns being put in place.
"The decision came as a huge surprise as the organisation
struggled yesterday to agree to a deal," Capital Economics said
in a note.
It "adds weight to our view that the oil market will be in a
deficit ... which will help lift the price of Brent to $60 per
barrel by end-year," it said.
OPEC member Iran's seizure of a South Korean tanker in the
Gulf also supported prices on Wednesday.
Tehran denied it was holding the ship and its crew as
hostages, a day after it seized the tanker while pushing for
Seoul to release $7 billion of funds frozen under U.S.
sanctions. U.S. crude oil inventories dropped by 1.7 million barrels in
the week to Jan. 1 to 491.3 million barrels, data from industry
group the American Petroleum Institute showed late on Tuesday.
EIA/S API/S