US oil closes 11 cents higher, at $30.77 a barrel

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U.S. oil futures ended Thursday trading higher, but well off their highs, after government data showed a rise in U.S. crude stockpiles, contradicting an earlier industry report.

U.S. crude settled 11 cents higher, or 0.36 percent, at $30.77 a barrel, while Brent futures fell 25 cents to $34.25 a barrel. Brent earlier traded as high as $35.73. WTI rose more than 3 percent at session highs.

The Energy Information Administration reported crude inventories rose by 2.1 million barrels in the last week as refineries hiked output. Analysts had expected an increase of 3.9 million barrels.

Futures had earlier gained support after the American Petroleum Institute, an industry group, said U.S. crude stocks unexpectedly fell by 3.3 million barrels last week.

Gasoline stocks jumped by 3 million barrels, beating expectations by 2.5 million barrels. Distillate stockpiles, which include diesel and heating oil, were up 1.4 million barrels, slightly below a consensus forecast.

A methanol plant and oil wells on Kharg Island in the Persian Gulf, off the coast of Iran
Iran's production revival is an oil market wild card

Crude had been up by more than 3 percent on Thursday after Iran on Wednesday welcomed plans by Russia and Saudi Arabia to freeze output.

The gain added to a more than 7 percent surge in the previous session, which came even though analysts said the market had overreacted to Iran's support for the caps and the Russian-Saudi move was unlikely to reduce the global surplus.

"It's a continuation of yesterday's move," said Carsten Fritsch, analyst at Commerzbank. "What we see still is extreme volatility. I would not be surprised to see prices retreating again by a big margin in coming days."

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar on Wednesday but did not say whether Iran would cap its output in keeping with the proposal put forward by Russia and Saudi Arabia.

On Thursday, Iraq's oil minister said talks would continue between OPEC and non-OPEC countries to prop up prices.

Iraq Oil Ministry spokesman Asim Jihad said an emergency meeting could be called next month "if there is an agreement among all parties, according to The Wall Street Journal.

Oil has collapsed from levels above $100 a barrel seen in mid-2014 due to excess supply, in a slide that deepened after the Organization of the Petroleum Exporting Countries later that year dropped its policy of cutting supply to boost prices.

"The agreement will do little to reduce the current supply glut," BMI Research said in a report on Thursday.

Iran exported about 2.2 million barrels per day (bpd) of crude before 2012, when sanctions imposed by world powers to curb Tehran's nuclear program cut shipments to about 1.1 million bpd.

The sanctions were lifted last month, allowing Iran to resume selling oil to the European Union. Sources familiar with Iranian thinking have said this week that Iran would not freeze output at current levels.