Oil Prices Jump on Rumor of Saudi Cuts

Demand for gasoline over the four weeks ended Friday was 3.2% lower than a year earlier, averaging 8.9 million barrels a day.

"By and large this report shows we've got a lot more product out there than most people thought we did," said Jim Ritterbusch, president of Ritterbusch and Associates. "This is just one more indication of a weak demand environment."

Prices at the pump continued to slide, falling 1.5 cents overnight to a national average of $1.683 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That's 55.7 cents a gallon below what it was a month ago and $1.312 below where it was a year ago.

All eyes are now turning to Algeria, where OPEC meets next week.

The Organization of Petroleum Exporting Countries, which accounts for about 40% of global crude supply, has signaled that it plans to reduce output quotas.

A growing number of analysts now expect production cuts of as much as 2 million barrels a day, which would match the combined reductions of two previous output cuts earlier this year.

OPEC's November production was well above quotas agreed to by members earlier this year that were intended to take 2 million barrels of oil off the market each day, according to Platts. OPEC's 13 members pumped an average of 31.38 million barrels a day last month, a decline of only 880,000 barrels from the October level.

Russian Energy Minister Sergey Shmatko said Wednesday that Russia wants to try to coordinate with other non-OPEC producers and will soon make an announcement of its intentions with OPEC.