Oil Up as Chinese Output Drops, U.S. Inventories Shrink


* API reports 3.8 million bbls U.S. crude decline

* Analysts forecast 2.7 million bbls build

* China output, Russia remarks on cooperation lend support


NEW YORK, Oct 19  – Oil prices rose more than 1 percent on Wednesday in anticipation of a possible drawdown in U.S. crude stocks last week and on Russian remarks about market coordination with Saudi Arabia.

The American Petroleum Institute (API), a trade group, reported on Tuesday that U.S. crude stockpiles fell 3.8 million barrels in the week to Oct. 14. Analysts polled by Reuters had forecast a 2.7-million barrel build.

The U.S. government’s Energy Information Administration (EIA) will report official inventory numbers at 10:30 a.m. EDT (1430 GMT).

If the API is correct in calling for a draw, it will be the sixth time in seven weeks that U.S. crude stockpiles have fallen, surprising analysts.

It is common for crude stocks to build at this time of year as refineries go into maintenance, turning out less gasoline and other fuel products. Refinery runs have fallen since the start of September, reaching 88.5 percent of capacity for the week ended Oct. 7.

“We are leaving open the possibility that the U.S. refiners are attempting to reduce rather than build stocks, possibly in anticipation of lower prices going forward,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

Brent, the international benchmark for crude, was at $52.32 a barrel, up 64 cents, or 1.3 percent, by 9:48 a.m. (1348 GMT).

U.S. West Texas Intermediate (WTI) crude rose 84 cents, or 1.7 percent, at $51.13.

Also supporting oil in early trade was evidence of declining production in China, and optimism that the Organization of the Petroleum Exporting Countries will secure an output cut at its meeting next month.

Oil prices have risen more than 14 percent over the past three weeks, with Brent hitting one-year highs above $53, after OPEC announced plans to remove some 700,000 barrels per day of production from a global crude glut of 1.0 million-1.5 million bpd estimated by analysts. PRODN-TOTAL

The group will meet on Nov. 30 to hash out production limits for individual members and coordinate similar reductions with non-OPEC producers, such as Russia.

Russian Energy Minister Alexander Novak said on Wednesday he was planning to meet his Saudi Arabia counterpart Khalid al-Falih this weekend to discuss coordination of possible actions.

(Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE; Editing by Jason Neely and Meredith Mazzilli)




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