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Oil Climbs After Data Shows Surprise Drawdown in U.S. Crude Stocks

Oil prices rose in mixed trading on Wednesday, as industry data showed a surprise draw in U.S. crude stocks. However, worries over a lack of agreement among producers to curb output kept a lid on gains.

Worker grabs a nozzle at a petrol station in Tehran
REUTERS/Raheb Homavandi/TIMA

Brent crude rose 24 cents to $46.21 a barrel in mid-morning trading, after settling down $1.38, or 2.9 percent.

U.S. West Texas Intermediate crude was up 11 cents at $44.79 a barrel after climbing as high as $45.09 in earlier trading. The benchmark ended down $1.26, or 2.7 percent, in the previous session.

Members of the Organization of the Petroleum Exporting Countries will hold informal talks on Wednesday. Its members are also meeting non-OPEC producers on the sidelines of the three-day International Energy Forum being held in Algiers and which ends on Wednesday.

Crude futures fell on Tuesday after Iran rejected an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply, dashing market hopes the two major OPEC producers would find a compromise this week to help ease a global glut of crude.

The market is coming to think this week's discussions could provide the groundwork for an agreement at OPEC's formal policy meeting set for Nov. 30 in Vienna, said Vyanne Lai, oil analyst at National Australia Bank in Melbourne.

Where Does Oil Come From? 0:43

"I think OPEC producers realize they can't continue to expand production indefinitely - OPEC producers are close to maximum capacity - so there could be room for a deal (in November)," Lai said.

An agreement in November could provide a short-term boost to prices, Lai said, although the level of support would depend at what level output is curbed, Lai said.

"Our expectation is prices will be relatively range-bound at slightly below $50," Lai said.