Investing.com – In a knee-jerk reaction, West Texas Intermediate oil futures extended gains surging to intraday highs, in North American trade on Wednesday, after data showed that oil supplies in the U.S. unexpectedly fell.
Prices pared gains as markets digested the information, but U.S. crude managed to hold above the $45 psychological level.
Crude oil for November delivery on the New York Mercantile Exchange gained 109 cents, or 2.47%, to trade at $45.19 a barrel by 10:34AM ET (14:34GMT) compared to $44.91 ahead of the report. West Texas Intermediate oil hit an intraday high of $45.47 immediately after the report.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 6.2 million barrels in the week ended September 16. Market analysts' expected a crude-stock increase of 3.35 million barrels, while the American Petroleum Institute late Tuesday reported a supply draw of a whopping 7.5 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 0.526 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 504,6 million barrels as of last week, which the EIA considered to be “historically high levels for this time of year”.
The report also showed that gasoline inventories tumbled by 3.204 million barrels, compared to expectations for a decline of 0.567 million barrels, while distillate stockpiles rose by 2.238 million barrels, compared to forecasts for an increase of 0.250 million.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for November delivery turned around, gaining 88 cents, or 1.92%, to $47.76 by 10:41AM ET (14:41GMT), compared to $46.58 before the release. The London barrel hit an intraday high of $47.11.
Oil traders continued to weigh prospects that major oil producing nations will freeze output to support the market when they meet next week.
OPEC members, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between September 26 and 28.
According to market experts, chances that the meeting would yield any action to reduce the global glut appeared minimal. Instead, most believe that oil producers will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on November 30.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.
Meanwhile, Brent's premium to the WTI crude contract stood at $1.65 a barrel by 10:42AM ET (14:42GMT), compared to a gap of $2.44 by close of trade on Tuesday.