Saudi Arabia kept oil output steady last month, an industry source said, after two months of sharp reductions that surprised oil traders and coincided with a rise in crude oil prices.

Saudi produced 9.05 million barrels per day (bpd) in January, from 9.025 million bpd in December, the industry source said, but supplemented that with deliveries out of storage.

Opec's leading producer responded to slower demand at home and abroad by lowering supply by around 700,000 bpd over the last two months of 2012, more than a 1 million bpd below peak production last summer.

The source said that Saudi supply to the market in January was 9.26 million bpd, implying deliveries out of storage of 210,000 bpd. Supply to market in December was 9.151 million bpd.

The Joint Oil Data Initiative shows Saudi crude stocks rose from about 230 million barrels a year ago to over 270 million barrels at the end of October.

Brent crude oil prices have been on an upward trend since November, trading near $116 per barrel yesterday, well over Riyadh's preferred $100 a barrel target.-Reuters