Updated from 11:26 a.m. EST
Oil futures cleared $63 a barrel Thursday as traders focused on bigger-than-expected drops in fuel inventories, colder weather and rising speculation that OPEC will trim production.
Light, sweet crude gained 67 cents to settle at a 10-week high of $63.13 a barrel. Wholesale unleaded gasoline added 14 cents to $1.81 a gallon and heating oil rose 1 cent to $1.81 a gallon. Trading was choppy because of the expiration of both contracts.
Inventories of gasoline tumbled by 600,000 barrels, distillates dropped by 1 million barrels and crude fell by 300,000 barrels last week. Analysts polled by
had expected gasoline and distillates to have risen last week as more refiners returned to full production.
Distillates, which include heating oil and jet fuel, have now fallen for nearly two months, which may pose a problem when the weather turns cold.
Stockpiles may also tighten further if OPEC goes ahead with another output cut. The cartel slashed daily production by 1.2 million barrels starting this month, though analysts and the U.S. Energy Department doubt its members have uniformly decreased exports. In its monthly oil market report, the federal agency stated the group had likely only trimmed output by at most 800,000 barrels per day.
OPEC members next meet Dec. 14 in Nigeria to determine whether they need another production cut to boost prices or not. The Venezuelan and Algerian oil ministers told
Thursday that another cut was increasingly likely and that it may be as high as 500,000 barrels per day.
Natural gas inched down 2 cents to $8.84 per million British thermal units on weather forecasts that cold temperatures won't last past next Tuesday. During the day, natural gas hit a high of $9.05 per million British thermal units after inventories dropped more than expected in the Energy Department's weekly supply update.
Last week, stockpiles plunged by 32 billion cubic feet vs. analysts' expectations of a 22 billion cubic-feet drop. At 3.41 trillion cubic feet, supplies are now 5.7% higher than last year and 7% above the five-year average.
On Wednesday, natural gas closed at a nine-month high of $8.87 per million British thermal units on cold-weather projections for much of the country. A cold front moving across the U.S. is expected to lower temperatures and boost heating demand this week. By Saturday, the warm weather in the Northeast, the biggest heating fuel market in the country, should be gone.
Among equities, the stocks of natural gas and oil exploration companies were up modestly. Natural gas companies
advanced more than 1%.