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Oil price rises to 10-month high at $54

Oil prices extended gains on Wednesday, rising to their highest since last February, after Saudi Arabia announced a big voluntary production cut, and as US crude inventories declined in the latest week.

Brent crude was up 79 cents, or 1.5 per cent, to $54.39 a barrel at 2:20 p.m. EST (1920 GMT). Earlier in the session, it hit a high of $54.73 a barrel, a level not seen since Feb. 26, 2020.U.S.

West Texas Intermediate futures were up 75 cents, or 1.5 per cent, to $50.66 a barrel. The contract touched $50.94 a barrel, its highest since late February.

US crude stocks fell sharply while fuel inventories rose, the Energy Information Administration said on Wednesday, and 2020 came to a close with a sharp decline in overall demand due to the coronavirus pandemic.

Crude inventories fell by 8 million barrels in the week to January 1 to 485.5 million barrels, exceeding analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.

The drop in crude stocks is typical for the end of the year, when energy companies take barrels out of storage to avoid hefty tax bills.

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