Oil jumped as Saudi Arabia prepared to slash shipments to U.S. refiners in an effort to prevent a price-killing buildup of American stockpiles.

Futures rose 2.8 percent in New York on Thursday. The Saudi state-controlled oil company has warned U.S. refiners to brace for a steep drop in cargoes next month, according to people briefed on its plans. Prices also were supported by a report of a large drop in stockpiles at the U.S. storage hub in Oklahoma, as well as an International Energy Agency warning that global supplies may be more fragile than previously thought.

"We should see a continued drawdown in crude supplies in the coming weeks and better demand," said Phil Flynn, senior market analyst at Price Futures Group in Chicago. "That would suggest we could be close to a floor in the market."

CANCELLED: Mexico cancels bidding on two oil and gas auctions

American refiners have been told to expect much lower shipments from Saudi Arabia in January compared with recent months after last week's OPEC agreement to cut production, according to the people.

That followed a report from the IEA that combined output losses from Iran and Venezuela could reach 900,000 barrels a day during the second quarter of next year, more than doubling the 800,000 barrels OPEC plans to remove from world markets.

Crude remains in a bear market after reaching a four-year high in early October. Record American output -- expected to boom to more than 12 million barrels a day in 2019 -- is threatening to overwhelm demand. The U.S. has also given some nations temporary exemptions from sanctions on Iran to prevent a market shock.

WTI Gains

West Texas Intermediate for January delivery gained $1.43 to $52.58 a barrel on the New York Mercantile Exchange. Total volume traded was 27 percent above the 100-day average.

SUPPLY: Crude inventories fall; U.S. loses net petroleum exporter status

Brent for February settlement climbed $1.30 to $61.45 on London's ICE Futures Europe exchange. The global benchmark crude traded at a $8.62 premium to WTI for the same month.

U.S. crude inventories fell by 1.21 million barrels last week, Energy Information Administration data showed Wednesday, a fraction of the 10.2-million withdrawal cited in an industry report a day earlier. That sparked a late-day selloff for crude that persisted until the Genscape and IEA reports.

"The excess volatility is being driven by the massive uncertainty about what's going to happen next," said Scott Bauer, chief executive officer of Prosper Trading Academy in Chicago. "It's a great market for day-traders, not so great if you're trying to put on a long bet."

--With assistance from James Thornhill, Sharon Cho, Mike Jeffers and Grant Smith.

©2018 Bloomberg L.P.