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LONDON - Oil jumped over 2 per cent on Thursday, supported by Opec supply cuts and a drop in fuel stocks in top consumer the United States.
Opec is lowering output and some members have said the group may cut supply further in December. The cutback comes as
oil demand is nearing its seasonal peak in the northern hemisphere winter.
"There is rising product demand, rising crude demand and Opec is cutting output," said Mike Wittner, analyst at investment bank Calyon. "Global demand will get us back to mid-US$60s crude by December."
US crude CLc1 was up US$1.42 to US$61.25 a barrel by 7.25pm GMT and rose as far as US$61.30, the highest since late October. London Brent LCOc1 rose US$1.81 to US$61.40.
Gulf members of Opec said on Wednesday they were fully committed to the 1.2 million barrels per day (bpd) cut agreed from November, but said markets remained oversupplied for now.
Saudi Arabia and other Gulf Opec members have said they see scope for further supply cuts when the producer group next meets on December 14 in Nigeria.
"Definitely, Opec will do what it takes to defend US$60," said Olivier Jakob, analyst at Petromatrix.
The US Energy Information Administration (EIA) said on Wednesday that Opec's existing plan to cut oil production could drain US crude inventories more than normal.
US distillate stocks, including heating oil, fell last week by 2.7 million barrels, more than the 500,000-barrel draw expected, the US government said on Wednesday.
But this level still left stocks about 11 per cent up on a year ago - ahead of peak winter demand for fuel EIA/S .
"The EIA numbers we got yesterday were not much of a surprise, although on balance, they were more bullish than bearish," Man Financial said in a report.
Oil's gains came as other commodities rose, with gold and silver hitting two-month highs. Platinum prices jumped more than 3 per cent after the dollar fell on news that China's central bank is planning to diversify its reserves.
Further strength came from a rally in US natural gas after data showed domestic supplies fell last week.
Democrats, who swept Republicans from power in the US House of Representatives, have pledged to roll back billions of dollars in tax breaks and financial incentives extended to the oil industry in energy legislation Congress passed last year.
But that is likely to have little impact on the oil market, analysts said.
- REUTERS