Oil prices jump on falling U.S. fuel inventories, lower production outlook

Oil prices rose more than 1.5 percent on Wednesday, extending gains from the previous day as the U.S. government cut its crude production outlook for next year and as fuel inventories plunged. 

Brent crude futures were up 76 cents, or 1.6 percent, at $48.28 per barrel by 0429 GMT, while U.S. West Texas Intermediate (WTI) crude futures were at $45.82 per barrel, up 78 cents, or 1.7 percent.

Both settled about 1.4 percent higher on Tuesday.

U.S. crude oil inventories fell by 8.1 million barrels in the week to July 7 to 495.6 million, according to the American Petroleum Institute (API), in an indictor that a long-standing fuel supply overhang is starting to draw down. 

Also, the U.S. Energy Information Administration said late on Tuesday that it expected 2018 crude oil output to rise to 9.9 million barrels per day (bpd) from 9.3 million bpd this year, a 570,000 bpd increase. This was down from last month's forecast 680,000 bpd year-over-year increase. 

Despite the slight downward revision, U.S. production is still set to break the 9.61 million bpd record from June 2015.

At the same time, output from the Organization of the Petroleum Exporting Countries (OPEC) remains high despite a pledge led by the producer group to cut supplies between January of this year and March 2018 in order to tighten the market and prop up prices.