WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange surged in early trading Friday on reports of deeper production cuts from Saudi Arabia and a larger-than-expected weekly draw from U.S. commercial crude supplies.
Nymex February West Texas Intermediate futures continued higher, gaining $1.59 to trade around $48.68 barrel (bbl), while ICE March Brent registered $1.61 advance to $57.56 bbl. Nymex February ULSD futures gained 5.33 cents to $1.7953 gallon and February RBOB futures rallied 4.77 cents to a $1.3972 at the start of Friday trading session.
Early-morning advances come on the hill of bullish supply data for the last week of December released by American Petroleum Institute late Wednesday afternoon. API reported commercial crude supplies declined 4.5 million bbl during the week ended Dec. 28, exceeding expectations of 2.5 million bbl draw.
The larger-than-expected draw in domestic crude inventories was reported following a recent interview with a former Saudi Aramco executive, Sadad al-Husseini, who suggested that Organization of the Petroleum Exporting Countries would cut production by 1.0 million barrels per day (bpd) by the end of January and is on track to reduce output by as much as 1.2 million bpd, well above the 800,000 bpd agreed at the start of December in Vienna.
In other news, China's commerce ministry announced the start of trade talks with the United States delegation on Monday and Tuesday in Beijing, signaling that the two countries are willing to come to the negotiating table to resolve the trade dispute.
The announcement came after China's Caixin Manufacturing Purchasing Managers Index showed the manufacturing sector in the world's second largest economy dipped into contraction for the first time in 19 months in December. During a three-day economic conference at the end of December, Chinese leadership seemed to address the slowing economic growth with proposals of deep tax cuts for Chinese businesses and monetary easing policy in 2019.
The Energy Information Administration will update U.S. supply data for the week ended Dec. 28 at 11 a.m. ET despite the partial government shutdown. EIA has FY 2019 appropriations and will continue publishing and collecting data, said the statistical and analytical division of the Department of Energy.
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