VIENNA, Austria, (AP) -Oil prices rose Thursday, after the U.S. government reported that gasoline inventories had fallen for the fifth straight week and OPEC’s president warned that the group may decide to further reduce output.
The Organization of Petroleum Exporting Countries last month announced its intention to cut production by 1.2 million barrels a day — 4 percent of its output — to shore up falling oil prices.
But market skepticism about how serious OPEC members are about reducing their quotas has meant oil prices have failed to rally. That, said OPEC President Edmund Daukoru, is leading to deliberations within the group about further cutbacks when oil ministers meet next month in Abuja, Nigeria.
“We might very well might cut more output in December,” Daukoru, who is also Nigeria’s oil minister, told Dow Jones Newswires.
Many industry sources believe OPEC will achieve about half of its announced cuts as member countries like Iran and Nigeria remain determined to maximize oil revenues.
Daukoru said global oil inventories will be key to any decision the group makes.
“We are quite aware of the general trend for global oil stocks and our philosophy is that if there is no market for our oil the best place to keep it is in the ground,” he said Wednesday.
In its monthly oil market report, also Wednesday, OPEC kept its global oil demand forecast for this year unchanged, calling for growth of 1.2 percent from 2005, but warned that bulging oil inventories could lead to “further imbalance” in the market.
Light sweet crude for December delivery rose 33 cents to $59.09 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. January Brent crude prices rose 32 cents to $60.93 a barrel on London’s ICE Futures exchange.
Heating oil futures jumped nearly 2 cents to $1.7118 a gallon on the Nymex. Unleaded gas slipped by less than a penny to $1.5760 and natural gas futures rose more than 7 cents to $8.191 per 1,000 cubic feet.
Oil prices have declined from a summer peak above $78 a barrel.
On Wednesday, the U.S. Energy Information Administration said in its weekly report that crude oil inventories rose 1.3 million barrels to 336.0 million barrels last week, but gasoline inventories fell by 3.7 million barrels to 200.3 million barrels.
U.S. inventories of gasoline have fallen about 7 percent over the past five weeks to levels that are about the same as a year ago, when Gulf Coast producers were still recovering from hurricanes Katrina and Rita. Refiners have been trimming production on the back of a 25 percent drop in oil prices over the past few months.
Distillates, which include heating oil and diesel fuel, fell by 3.6 million barrels to 135.0 million barrels. A small rise in heating oil was offset by a large drop in diesel fuel.
Demand for distillate fuel has been stronger than usual. The EIA reported that demand for distillates over the last four weeks has been the highest four-week average ever for any period that doesn’t include January or February, when cold weather usually causes heating oil demand to peak.
The EIA noted, though, that the high demand numbers could be caused by retailers and consumers buying fuel to pad their own inventories ahead of winter.
Vienna’s PVM Oil Associates suggested that demand could pick up in the midterm, citing AccuWeather forecasts that the northeastern United States, “the key consuming region for heating oil, would start the winter with warmer weather, but temperatures should drop below normal levels in January and February.”