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Oil gains as Saudis see steady output after US stockpiles rise
[HONG KONG] Oil rose after dropping the most in a month as Saudi Arabia said it won't boost output to capacity and flood a market that's contending with a global inventory overhang of crude and fuel supplies.
Futures rose as much as 0.7 per cent in New York after falling 6.2 per cent the previous three sessions.
The market is saturated with stored crude and Saudi Arabia doesn't see a need for the kingdom to produce at full capacity, Energy Minister Khalid Al-Falih told Al-Arabiya television as Organization of Petroleum Exporting Countries (Opec) members plan to meet this month to discuss action to stabilise prices.
US crude inventories increased by 2.28 million barrels last week for a second straight gain, according to the Energy Information Administration.
Oil rose 7.5 per cent in August amid speculation that talks in Algiers may lead to an agreement to manage the market.
A cap on production would be positive, Mr Al-Falih said in an interview last week, while ruling out an output cut.
A freeze deal between members of the Opec and other producers was proposed in February but a meeting in April ended with no final accord.
"The surplus is still there and that's enough to keep the price from sustaining any strong rally," said David Lennox, a resources analyst at Fat Prophets in Sydney.
"We have the Opec talks at the end of September and we're going to get a lot of speculation driven-volatility leading into that."