Oil: US crude stockpiles build

Oil fell further below US$59 a barrel on Wednesday as a larger-than-expected rise in US crude stocks offset a likely Opec output cut.

US light crude for November eased 41 cents to US$58.52 a barrel by 1537 GMT, adding to losses of US$1.01 the previous session. London Brent crude fell 47 cents to US$60.47.

US crude stocks rose 5.1 million barrels last week, the Energy Information Administration said, surpassing analysts expectations for a 1.3 million barrel increase.

Domestic distillate stocks, which include heating oil, fell a larger-than-expected 4.5 million barrels, while petrol dropped 5.2 million barrels.

"We have a bigger-than-expected rise in crude stocks and a much larger-than-expected draw in all products," said Tom Bentz of BNP Paribas. "I'm thinking the market is going to hold. We have an Opec meeting tomorrow."

Ministers from the Organisation of the Petroleum Exporting Countries will meet in Qatar on Thursday to clear a deal to remove 1 million barrels from daily output in an attempt to stem oil's drop from a high of US$78.40 in July.

Kuwait's energy minister said some hawkish Opec oil ministers were pushing for an even deeper output reduction.

"They feel that one million may not have any impact on oil prices. That's the thinking of some, I feel this thinking is there, we'll see it when we meet," Sheikh Ali al-Jarrah al-Sabah told Reuters in an interview.

Opec member Venezuela made a second cut in its oil production this month, slicing a further 50,000 bpd from its output this week after a cut of the same amount on Oct. 1, a senior official with state oil firm PDVSA told Reuters.

Venezuela and Nigeria have led efforts to trim production and halt a rapid decline in oil prices, which hit a 2006-low of US$57.22 a barrel last week.

The group is divided on whether it should cut the output from actual production of roughly 27.5 million barrels per day (bpd) or from its nominal 28 million-bpd ceiling, a disagreement analysts say has hurt Opec's credibility.

"Everyone is taking a wait-and-see attitude with Opec," said Olivier Jakob of Petromatrix. "They could have a one million barrel cut on paper, but in reality it could be smaller than that."

- REUTERS