(Bloomberg) -- Oil surged as U.S. crude stockpiles shrunk and exports rebounded in the wake of global supply cuts.Futures erased losses on Wednesday in New York after a U.S. government report showed domestic crude inventories dropped nearly 10 million barrels last week, the biggest decline since July. At the same time, U.S. crude exports increased by the most in five months, while imports slid for a second straight week.Supplies are seen declining outside of the U.S., with Saudi Arabia and Iraq planning to throttle back production next month as the OPEC+ coalition seeks to shore up prices against resurgent virus infections and new lockdowns. OPEC Secretary General Mohammad Barkindo said Wednesday at the S&P Global Platts virtual conference that he is “cautiously optimistic” about an economic rebound this year.“The combination of lower imports and higher exports is driving the draw,” said Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. The rise in exports is a “signal that global demand continues to improve and is likely stronger than here in the U.S., at least for now.”The oil market’s structure has also showed signs of strength. The premium of Brent and West Texas Intermediate crude’s nearest contract has been widening over the next one in a bullish formation known as backwardation. The market’s switch to backwardation means “we are hopeful that 2021 will be a good year,” Barkindo said Tuesday.“The front of the curve is surprisingly strong,” said Helge Andre Martinsen, senior oil market analyst at DNB Bank ASA. “With the Saudi cut from the start of February, the market balance flips to undersupply despite some demand softness. We have also witnessed some export hiccups in Libya, and increased cut compliance from Iraq.”The Energy Information Administration report also showed crude inventories at the nation’s biggest storage hub at Cushing, Oklahoma, declined to the lowest since July. Several U.S. refiners are delaying maintenance, an indication that more declines at Cushing are likely.“With U.S. supplies shrinking and OPEC+ still keeping a tight rein on the other part of the supply equation, the market is expected to be in a deficit despite the reduced demand from the resurgent virus,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.