Oil prices rise on OPEC output cuts, but surging US supply drags

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SYDNEY/SINGAPORE (Jan 18): Oil prices rose on Friday after a report from the Organization of the Petroleum Exporting Countries showed its production fell sharply last month, easing fears about prolonged oversupply.

US West Texas Intermediate (WTI) crude futures were at US$52.57 per barrel at 0253 GMT, up 50 cents, or 1%, from their last settlement.

International Brent crude oil futures were up 45 cents, or 0.7%, at US$61.63 per barrel.

OPEC, along with some other producers including Russia, cut oil output sharply in December before a new accord to limit supply took effect on Jan 1, it said on Thursday, suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand.

OPEC said in its monthly report that its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd, the biggest month-on-month drop in almost two years.

But tempering that support for prices, OPEC also cut its forecast for average daily demand for its crude in 2019 to 30.83 million barrels, down 910,000 bpd from the 2018 average.

Undermining OPEC's efforts to tighten oil markets has been a surge in crude output from the United States, which increased by more than 2 million bpd in the last year to an unprecedented 11.9 million bpd.

"Supply remains a tug-o-war between rising shale production and OPEC agreed limits," said Alfonso Esparza, senior market analyst at futures brokerage Oanda.