WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange surged in early trading Wednesday on an unexpected draw in U.S. commercial crude supplies, while Saudi Arabia and Russia pledged to continue their price-boosting policy of reducing output.
NYMEX April West Texas Intermediate futures surged $0.97 to $56.47 barrels (bbl), while ICE April Brent futures traded $0.70 higher near $65.91 ahead of Thursday's contract expiration.
The Nymex March RBOB contract gained 1.82 cents to $1.6045 ahead of expiration Thursday afternoon, with April futures trading at sharp $0.1320-gallon premium, reflecting the gasoline market seasonal uptrend. March ULSD futures was trading more than 1.0 cents higher and at near parity to April delivery at $2.0100 gallon.
Early morning advances come on the hill of bullish supply data released by the American Petroleum Institute late Tuesday afternoon. API reported a 4.2 million bbl draw in U.S. commercial crude inventories to 444.3 million bbl in the week ended Feb. 22, missing calls for 2.5 million bbl build, while also detailing a surprise draw in gasoline stocks.
Energy Information Administration will release its weekly supply data at 10:30 a.m. ET Wednesday. Last week EIA reported U.S. crude production has risen to a record 12.0 million barrels per day (bpd), a sharp increase of 2.0 million bpd over the past year.
Oil futures were boosted by the latest comments from Saudi Arabia energy minister Khalid al-Falih, who reaffirmed his country's commitment to cutting output to rebalance the market. In a Wednesday interview, al-Falih said there is also the likelihood that production cuts could be extended into the second half of 2019, while noting that the market was gradually responding to Organization of the Petroleum Exporting Countries production cuts.
OPEC and 10 producers outside the cartel led by Russia agreed in December of last year to hold back crude output by a collective 1.2 million bpd for the first six months of the year. Saudi Arabia, the world's largest exporter of crude, has so far shouldered the largest burden of those cuts, coming down by around 350,000 bpd last month, according to OPEC.
In tandem with the comments made by his Saudi colleague, Russian energy minister Alexander Novak reaffirmed his country's commitment to the policy of production cuts, while stating Russia would reach compliance by the start of April.
In a Wednesday morning interview, Novak said Russia continues the policy of production cuts, while detailing an almost 140,000 to 150,000 bpd reduction in its output achieved since the start of OPEC agreement. Novak said, "By 1 February, we started to reduce production somewhere about 90,000-100,000 barrels per day. These are quite large and high rates of reduction. And I think that we will reach the parameters that were agreed upon under the agreement during March, by the end of March -- the start of April."
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