Oil prices jumped on news that U.S. crude inventory fell a surprising 4.3 million barrels last week, when analysts were only looking for a 600,000 barrel decline.
Gasoline stocks fell 100,000 barrels, well below expectations of 1.2 million-barrel increase and distillate inventories tightened for a tenth straight week -- down half a million barrels.
The unexpected decline in inventories came as crude oil imports slumped by 701,000 barrels per day to 9.6 million bpd, the EIA report showed.
The shifts in inventory levels leave crude stocks about 4% higher than last year, gasoline stocks about 3% below last year and distillate stocks about 2% below last year, the data showed.
The data suggests the last round of OPEC cuts are beginning to filter their way through the system, said John Kilduff, a senior vice president at Fimat USA, on CNBC's "Power Lunch."
Heading into Thursday's OPEC meeting, Kilduff doesn't expect any further cuts from the oil cartel, which produces more than a third of the world's oil.
"I was always of the opinion that this particular decision was going to be price-driven," Kilduff said. "Sixty dollars was the line in the sand, and we're over it, so we get a pass until the January for now."
OPEC Meeting Thursday
OPEC must decide whether to curb supplies beyond the 1.2 million barrels per day ministers agreed on November 1.
OPEC appears willing to pull back from more oil output cuts in response to consumer nation calls to hold off until winter has passed to guard against price spikes that would hurt the world economy.
"I don't think there will be any cut," the head of Libya's delegation, Shokri Ghanem, told Reuters on Wednesday.
There is consensus in the group the market is oversupplied -- crude oil stocks in top consumer the United States are at a 13-year high -- but some ministers fear cutting output again now, during peak demand, could drive prices further above $60.
U.S. Energy Secretary Sam Bodman and International Energy Agency head Claude Mandil have called on OPEC to wait until next year before deciding on further supply reductions.
OPEC's core Gulf members, including leading exporter Saudi Arabia, are among those who favor holding fire, a delegate said. They want to see OPEC focus on its existing agreement.
"No cut, compliance -- this is the view up until now from the Gulf members," the delegate told Reuters.
OPEC's research director Hasan Qabazard concurred that if members abided by the deal they struck in Qatar in October, that should do the job of restoring equilibrium.
"If we achieve the cuts agreed in Doha, the market will more of less be in balance," he told Reuters.
Members have delivered almost two thirds of the 1.2 million bpd reduction so far, according to Reuters estimates.
Qabazard estimated compliance higher, at 80 to 85%, leaving slack of 200,000 to 300,000 bpd of oil.
The IEA, adviser to 26 industrialized countries, said in its monthly report on Wednesday OPEC cuts from November 1 were making themselves felt, "cold comfort for a risk-prone global economy already facing another winter with high oil prices."
Some ministers have indicated they are prepared to take note of consumer nations' calls.
"When we meet we will look at all the factors and we will come up with what is best for us, what is best for the consumer and what is best for the global economy," said OPEC President Edmund Daukoru, also Nigeria's minister of state for petroleum.
Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah said he believed OPEC should stay its hand if prices remained at $60. On Wednesday morning, U.S. crude stood at $60.88 a barrel.
United Arab Emirates' Oil Minister Mohammed bin Dhaen al-Hamli said OPEC would only cut if "absolutely necessary."
Oil has fallen from a mid-July peak of $78.40 but is still three times the price at the start of 2002 as Asian demand kicked in. Refining constraints and worries over supply from Iraq, Nigeria, Iran and Russia helped fuel the rally.
Members Are Divided
A delegate said members were divided 50/50 over the need to reduce supplies from the current target of 26.3 million bpd.
Iran and Venezuela are among those pressing for a reduction.
Cuts in place have already gone some way toward draining oil stocks in the industrialized world that reached 2.76 billion barrels, 55 days of demand, in September.
The IEA's latest report said stocks fell in October to 2.72 billion barrels, 54 days of demand. Weekly data indicates a further decline in November, the IEA added.
"We believe that unless prices fall sharply in the next two days, OPEC will not cut because they will not need to and will not have any incentive to," said Mike Wittner, global head of energy market research at investment bank Calyon.