LONDON (Reuters) – Oil edged a little higher toward $41 a barrel on Wednesday despite the expectation weekly U.S. data will show a build in crude stockpiles as demand for energy in the world’s biggest oil consumer declines.
The move was supported by signals from the Organization of the Petroleum Exporting Countries that it may cut oil production further in an attempt to bolster the market.
U.S. light crude for March delivery rose 8 cents to $40.86 a barrel by 0938 GMT. It is down more than 50 percent from a year ago.
London Brent crude was 8 cents up at $44.16 a barrel.
“The economic context remains very weak and the market is waiting for U.S. oil data later today,” said Harry Tchilinguirian, oil analyst at BNP Paribas in London.
“Surprise builds in product inventories will only validate assessments of underlying weak oil demand.”
Oil has plummeted by more than $100 since hitting a record near $150 a barrel in July last year as the global downturn has weighed on demand for fuel.
The U.S. Energy Information Administration will release its oil data at 10:30 a.m. EST (1530 GMT).
A Reuters poll of analysts forecast the report would show that U.S. inventories of crude oil rose for the sixth straight time last week as refinery utilization was curbed by seasonal maintenance, rising imports and falling demand.
Crude supplies were projected to have risen 2.8 million barrels in the week to January 30. The poll forecast a 1.3-million-barrel drawdown in distillate stocks, which include heating oil and diesel, and a 600,000-barrel increase in gasoline inventories.
On Tuesday, the American Petroleum Institute (API) said U.S. crude oil stocks jumped 8.1 million barrels last week. Oil traders and analysts generally consider the API report to be less credible than EIA data.
“The unexpectedly big build in crude in the API stats is the driver at the moment and I expect today’s data to show another big build in crude stocks,” said Christopher Bellew, broker at Bache Commodities in London.
OPEC is deeply worried by the impact the global economic downturn is having on oil demand and has promised to reduce oil production by a total of 4.2 million barrels per day (bpd) from levels seen in September.
OPEC President Jose Botelho de Vasconcelos, who is also Angola’s oil minister, told Reuters on Tuesday the 12-member group could remove more oil from the market if needed to boost prices.
OPEC in January met only two thirds of its pledge to lower oil output as several members of the producer group continued to pump above target levels, a Reuters survey showed.
There is little sign of an improvement in oil demand.
On Tuesday, weak retail sales in the United States and Germany, as well as a jump in Spanish unemployment, provided the latest evidence of a severe, synchronized recession.
News that about 30,000 unionized workers at U.S. refineries, chemical plants and pipelines reached a deal with industry on a new basic contract on Tuesday, averting a nationwide strike, failed to pressure prices.
The oil market has been in contango, with oil for delivery next March a third pricier than for the March this year, creating a chance for traders to profit from storing crude for later use.