The price of oil edged higher above $97 a barrel Thursday as investors reacted to a drop in U.S. stockpiles, but concerns of oversupply in the Middle East capped gains.
By early afternoon in Europe, benchmark U.S. crude for January delivery was up 37 cents at $97.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.16 to close at $97.20 on Wednesday
Prices rose after the Energy Department said crude oil supplies fell by 5.6 million barrels, or 1.4 percent, last week, ending 10 straight weekly increases. The decline was more than four times bigger than analysts had predicted.
Market momentum was hindered, however, by Iran's announcement to fellow OPEC members that it plans to pump up to 4 million barrels a day once sanctions on its crude exports are lifted. Libya also hopes to increase output to 2 million barrels a day once unrest ebbs.
In all, OPEC members would have to reduce their production to keep prices from dropping sharply and hurting oil revenues that underpin their economies. This sparked concerns of a production war inside the cartel, which held a meeting on Wednesday.