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Brent crude futures were up 36 cents, or 0.5%, at $76.65 a
barrel by 0949 GMT while U.S. West Texas Intermediate crude
futures gained 37 cents, or 0.5%, to $72.11.
Both benchmarks jumped more than $1 on Monday after Saudi
Arabia's decision over the weekend to reduce output by 1 million
barrels per day (bpd) to 9 million bpd in July.
"As things stand, the oil market is on the cusp of a massive
shortfall," said PVM Oil's Stephen Brennock.
"Additional Saudi cuts are expected to deepen the market deficit
to more than 3 million bpd in July by some estimates".
Prices fell earlier in the session on weak Chinese economic data
and rising U.S. fuel inventories.
China's exports shrank much faster than expected in May and
imports fell, albeit at a slower pace, as manufacturers
struggled to find demand abroad and domestic consumption
remained sluggish.
Wednesday's data also showed that crude oil imports into China,
the world's largest oil importer, rose to their third-highest
monthly level in May as refiners built up inventories.
A JP Morgan note showed forward crude cover in the country has
climbed, indicating refiners have not increased processing rates
but are instead storing oil.
U.S. gasoline inventories, meanwhile, rose by about 2.4 million
barrels and distillates inventories were up by about 4.5 million
barrels in the week ended June 2, market sources said on
Tuesday, citing American Petroleum Institute figures.
The unexpected build in fuel inventories raised concerns over
consumption by the world's top oil user, especially as travel
demand grew during the Memorial Day weekend.
The U.S. Energy Information Administration (EIA) on Tuesday said
that U.S crude oil production this year would rise faster and
demand increases would be slower than previously expected.
(Reporting by Ahmad GhaddarAdditional reporting by Yuka Obayashi
and Muyu XuEditing by David Goodman)
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