NEW YORK – Oil prices rose to the highest in nearly two months Wednesday after U.S. inventory data showed unexpected declines in winter fuel stockpiles as cold weather loomed in the world's top energy market.
U.S. light crude settled up $1.47, or 2.4 percent, to $62.46 a barrel, after hitting the highest level since Oct. 2 at $62.52. London Brent crude settled up $1.86 at $63.07 a barrel.
U.S. government data showed U.S. distillate stocks, including heating oil, fell 1 million barrels last week. Forecasters had predicted a 400,000 barrel increase.
"The market is reacting bullishly to the distillate stock draw," said Phil Flynn, analyst at Alaron Trading, Chicago. "Distillates are moving in the wrong direction as they should be rising, not falling, at this time."
Gasoline stocks also fell by 600,000 barrels, countering expectations of a half-a-million barrel rise, while crude stocks declined by 300,000 barrels, compared with forecasts for a 100,000 barrel fall.
Adding strength to prices, the U.S. Federal Reserve reported moderate economic growth through the first weeks of November in its Beige Book summary of economic conditions.
"The Beige book showed the economy is in good shape, adding fuel to the fire," said Mike Fitzpatrick, vice president of energy risk management at Fimat USA.
Prices had already been rallying before the U.S. data as a combination of technical strength and forecasts of colder weather helped to drive the market.
Private forecaster AccuWeather said cold weather would hit the U.S. East Coast by the weekend, ending a stretch of above-normal temperatures that had curbed fuel demand.
Kuwait's oil minister, Sheikh Ali al-Jarrah al-Sabah, told Reuters on Wednesday current U.S. crude prices were "very comfortable" and further output cuts would be needed only if prices fell sharply.
"In my personal opinion, if prices maintain these levels, I don't imagine that there is a need for a reduction," he said.
The Organization of Petroleum Exporting Countries, which meets next on Dec. 14 in Nigeria, agreed last month to reduce output by 1.2 million barrels per day from Nov. 1.
Many in the market have voiced skepticism about OPEC's commitment to the cutback.
However, PIRA Energy, a leading energy consultancy, said Wednesday that OPEC crude exports have fallen by 1.28 million bpd in the four weeks to Nov. 19 and were 1.7 million bpd below their recent peak in mid-October.