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Oil Rises on Supply Cut and Strong Economic Data

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oilOn Thursday, oil prices rose on news that Saudi Arabia was cutting its supply for the market in September. Nevertheless, its overall production increased month on month. Strong economic data out of China and Europe helped move oil higher as well.

Crude oil was up $1.57 when it settled at $82.09 per barrel.

OPEC’s largest oil producer pumped almost 9.7 million barrels a day during September, which was up from its 9.6 million per day during August.

However, the quantity of crude supplied by the kingdom to its export and domestic markets dropped to just 9.36 million barrels, which was down from its 9.69 million for the month of August. Those barrels the market does not receive are held in storage.

One analyst called the increase on Thursday a knee jerk reaction since Saudi really has not cuts its output overall.

Saudi Arabia previously has sent out signals that it was comfortable with the oil prices being much lower and that it would be willing to keep the supply high to compete for more market share.

December Brent crude rallied by close to $2 a barrel on Thursday afternoon after touching a low of one week of $84.22 earlier in the day. On Wednesday, the benchmark was down by $1.51 its biggest one-day loss in over a week.

Inventories of U.S. crude surged last week by over 7 million barrels to 377.67 million barrels, which is two times the 2.7 million barrel rise that analysts were forecasting.

Economic data supported an increase in oil as well. Industry activity across the euro region grew at a rate that was much faster than was predicted by analysts for October, the purchasing managers’ index showed Thursday.

Growth in industry in China quickened to a high of three months for October.

However, overall growth in the largest importer of oil in the world is sitting at its slowest rate since the financial crisis hit globally in 2009. It risks missing is target for just the first time in the past 15 years.

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