Contracts for U.S. crude pared earlier losses to settle down 14 cents at $74.50 after Libya's representative to OPEC fueled hopes of an output cut, prompting traders to focus on next week's meeting of the producer group and ignore an unexpected surge in U.S. crude inventories.
Oil prices rose on Wednesday after Libya's representative to OPEC fueled hopes of an output cut, prompting traders to focus on next week's meeting of the producer group and ignore an unexpected surge in U.S. crude inventories.
U.S. crude stockpiles rose 2.6 million barrels last week, compared with forecasts of a 800,000-barrel draw, as imports rose to meet demand from refineries hiking runs after seasonal maintenance, data from the Energy Information Administration showed.
U.S. crude and Brent futures shrugged off the bearish build and were both up about 1 percent after Libya's OPEC Governor Samir Kamal told Reuters he expected the group at a Nov. 27 meeting to agree to stop producing over its target, a step that would cut about 600,000 barrels per day.
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Unseasonably cold weather across America and a 2-million barrel draw in distillate supplies last week also provided support to prices of U.S. heating oil, as temperatures in all of the country's 50 states hit freezing levels or below on Tuesday.
Meanwhile, U.S. natural gas soared to its highest level since early last week. Front-month gas futures on the New York Mercantile Exchange were last up 14 cents, or about 3 percent, at $4.38 per million BTUs, having gained nearly 6 percent earlier.
was down 20 cents at $78.27 a barrel by 2 p.m. EDT. It fell 42 cents earlier to a session low of $78.05, after closing down in two previous sessions.
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"Clearly, everyone's thoughts are on OPEC, so it's not surprising at all to see the feeble market reaction to the EIA," said Kyle Cooper, managing director at Houston energy consultancy IAF Advisors.
Oil ministers from the Organization of the Petroleum Exporting Countries will meet in Vienna to consider adjusting their output target of 30 million bpd. Fears of an oil glut and a 30 percent drop in Brent prices since June have led a few producers to clamor for sharp output cuts. But OPEC heavyweight Saudi Arabia hasn't said it will support that.
Morgan Stanley oil analysts led by Adam Longson said in a research note they thought OPEC was likely to cut production sooner or later.
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But seasoned OPEC veterans told Reuters they did not know which way the group will lean.
"For the first time, I really do not know what is likely to happen at the meeting. It is not clear," one long-serving senior OPEC delegate said.