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NEW YORK - Oil struck two-month highs over US$63 on Thursday as US winter fuel supplies fell ahead of a cold front in the world's top heating oil market and on news Opec could strengthen its market muscle by adding members.
US crude rose 73 cents to US$63.19 a barrel at 2:05 p.m. (1905 GMT), after earlier reaching US$63.30, its highest since Oct. 2. Brent crude rose US$1.23 to US$64.30 a barrel.
African oil producers Angola and Sudan followed South America's Ecuador in expressing interest in joining oil cartel Opec, which currently pumps over a third of world crude output and holds 75 per cent of global reserves.
"Opec adding other countries in theory should be supportive because it would mean more crude production that would be hemmed in when the cartel decides to cut production," said Nauman Barakat of Macquarie Futures USA.
The three countries would boost Opec's output by 2 million barrels per day, or 6 per cent. Experts said giant producer Saudi Arabia would remain the key player in determining the group's policies.
"Price-wise, these countries won't make enough of a difference to be price-determinate. It will still be Saudi pulling the strings," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
With prices above US$60, Opec ministers expressed conflicting opinions this week on whether the group needs to add to production cuts of 1.2 million bpd agreed in October when the group meets next on Dec. 14.
Venezuela's energy minister told Reuters on Thursday it would propose an output cut of "possibly a little more than" 300,000 bpd. Algerian Oil Minister Chakib Khelil said he would support further reductions at the meeting.
But Kuwait's oil minister earlier this week said prices were "very comfortable" and that he saw no need to deepen the cuts negotiated last month, which were aimed at countering a 25 per cent price slide from records over US$78 a barrel in July.
Oil also found support as the dollar fell to a 14-year trough against sterling and a 20-month low versus the euro. Gold spiked to its highest level since early August.
US inventories of crude oil and refined products fell last week as imports eased and demand was robust as the world's biggest energy consumer prepares for winter, the Energy Information Administration (EIA) reported on Wednesday.
The draw came as forecasters called for colder weather in the key US Northeast heating oil market.
Distillate stocks, including home heating oil, fell by one million barrels against analyst expectations of a stock build.
The news pushed oil prices above US$62 on Wednesday, helping the market finally break through a two-month-long trading rut.
"Yesterday's DOE statistics were bullish, and they provided the market with enough fodder to push quotes over important resistance levels," Peter Beutel, analyst at Cameron Hanover, said in a research note.
But some traders were sceptical that this was the beginning of a longer term rally, as global stockpiles remained healthy.
"I'm not convinced it will continue trading up. Signs are that this was probably a false break," said Christopher Bellew, an oil futures broker at Bache Financial in London.
- REUTERS
