Oil prices rose on Thursday in an up-and-down session, lifted by news that Saudi Arabia had cut production to meet OPEC's agreement to cut output after falling on data showing a surprisingly large increase in U.S. gasoline and distillate inventories.
Saudi Arabia cut oil output in January by at least 486,000 barrels a day to 10.06 million barrels a day, according to a Gulf source familiar with Saudi oil policy. That would mean the world's largest crude producer was holding up its end of a November agreement by the Organization of Petroleum Exporting Countries to reduce output.
That boosted oil prices, which had slipped after the U.S. government reported a big increase in U.S. gasoline and distillate inventories.
Oil has rallied 23 percent since mid-November and speculators have jumped on the rally, loading up on long positions in crude futures in recent weeks in anticipation of OPEC's supply cuts.