Commodities: Oil futures jump on reports of decrease in Saudi output

Commodities found a bid on Wednesday, reversing early losses following reports that Saudi was indeed meeting its output cut pledges with the Organisation for the Petroleum Exporting Countries and the cartel's main allies.

As of 1846 GMT, the Bloomberg commodity index was adding 0.58% to 77.16 even as the US dollar index climbed 0.89% to 96.9390, putting it within throwing distance of its 52-week highs at 97.7110.

According to Bloomberg, which cited its own survey of officials in the Kingdom, shipping data and analysts, Riyadh curtailed its exports of black gold by 420,000 barrels a day in December to 10.65m.

Meanwhile, poor weather resulted in a 100,000 b/d cut to output from the Lybian port of Es Sider.

The news saw Brent for prompt month delivery spike to $56.56 a barrel on the ICE following a drop to an intraday low of $52.51.

However, Iraq and the United Arab Emirates had reportedly increased their own production, with the former's rising by 130,000 b/d to 4.7m b/d, although that of Iran and Libya had fallen.

In parallel, RBOB gasoline on NYMEX was higher by 3.06% at $1.3420 a gallon, while similarly-dated natural gas futures were ahead by 0.78% at $2.96/MMBtu, while headting oil was adding 1.69% to $1.7078 a gallon.

Weighing on Brent, earlier Caixin/IHS Markit revealed a drop in their manufacturing sector Purchasing Managers' Index from 50.2 in November to 49.7 in December. This marked the first contraction in 19 months and fell short of expectations for a reading of 50.1.

On that note, Priyanka Kishore at Oxford Economics said: "Going forward, the truce between the US and China is likely to provide some short-term support to external demand and manufacturing, leading to less of a divergence between North Asia and the rest of the region. Nonetheless, the possibility of renewed escalation of trade tensions during the course of 2019 cannot be ruled out and we remain fairly cautious in our expectations for industrial activity across the region."

For their part, on Wednesday evening, analysts at Capital Economics told clients: "assuming full OPEC+ compliance, our analysis suggests that the oil market will be close to balance in the first half of this year. However, slower growth in the US economy later in 2019 will weigh on global consumption, with the market expected to return to a comfortable surplus."