2021.01.0708:51:00UTC+00Oil Extends Gains After Saudi Cuts, Inventory Draw

Oil prices rose for a third straight session on Thursday after Saudi Arabia announced a big voluntary production cut and data showed a fall in U.S. stockpiles.

Benchmark Brent crude rose 0.2 percent to $54.42 a barrel, after having risen 1.3 percent overnight. U.S. West Texas Intermediate (WTI) crude futures were up half a percent at $50.87 a barrel, after gaining 1.4 percent in the previous session.

Amid weakening oil demand following new Covid-19 lockdowns, Saudi Arabia announced on Tuesday that it would cut its crude output by an additional 1 million barrels per day over the next two months.

This move by Saudi Arabia, the world's biggest exporter, means the OPEC+ will be reducing output by 8.125 million barrels per day and 8.05 million barrels per day in February and March, respectively.

The Energy Information Administration (EIA) said on Wednesday that crude inventories in the U.S. dropped by 8 million barrels in the week to January 1, nearly 4 times the expected drop.

A day before, the American Petroleum Institute reported that U.S. crude inventories fell by 1.663 million barrels last week, after a draw of 4.785 million barrels the previous week.

As the vaccination rollout raises hopes for a recovery in demand, UBS raised its forecast for Brent oil prices to $60 per barrel by mid-year.