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NEW YORK - Oil rose to a two-month high over US$62 a barrel today after US inventory data showed unexpected declines in stocks of winter fuel as colder temperatures loomed in the world's top energy market.
US light crude CLc1 rose US1.49, or 2.4 per cent, to US$62.48 a barrel by 1930 GMT, after hitting US$62.52, the highest level since Oct. 2. London Brent crude LCOc1 traded US$1.89 higher at US$63.10 a barrel.
US government data showed US 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."
Petrol 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 US 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 US 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 US 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 US 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 Organisation 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 scepticism about Opec's commitment to the cutback.
However, PIRA Energy, a leading energy consultancy, said on 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.
- REUTERS
