Oil prices surged more than a dollar Wednesday as worries over a possible OPEC output cut this spring countered a rise in crude and gasoline stocks in the United States.
NEW YORK Oil prices surged more than a dollar Wednesday as worries over a possible OPEC output cut this spring countered a rise in crude and gasoline stocks in the United States.
U.S. light crude was up $1.14 to $48.40 a barrel while London's Brent crude rose 91 cents to $46.30 a barrel.
The gains came after the Energy Information Administration warned an OPEC cut this spring could slice into a year-on-year inventory surplus in the world's largest energy consumer and make it hard for refiners to make fuel.
OPEC has been contemplating a cut to its output limits to counter an expected decline in second-quarter global demand. The cartel, which controls 40 percent of world oil exports, will meet in mid-March.
OPEC's acting Secretary-General said on Wednesday that the group was leaning towards a plan to reduce oil production at its mid-March meeting in Iran.
"There is a general tendency among OPEC members to reduce production at the meeting and we will find out during the meeting whether there is a need to cut," Adnan Shihab-Eldin told Reuters.
Earlier in the day, the EIA released a report showing crude oil stocks rose 2.1 million barrels last week to 296.4 million and gasoline inventories increased 4.9 million barrels to 221.7 million.
The builds last week, pegged to higher import levels and strong refining activity, increased the U.S. supply surplus and eased fears of a springtime crunch.
Oil prices have been stuck in a $45-$50 range since early January as a relatively mild northern winter makes inventory levels more comfortable.
OPEC on Wednesday raised its forecast for world oil demand growth this year but projected a build in stocks of spare oil when consumption eases after the northern hemisphere winter.
Wide discrepancies in forecasts for world oil demand growth in 2005 are likely to make it another difficult year for OPEC to judge supply policy, analysts said.
World oil demand growth in 2005 could be anywhere from 1.3 million barrels a day to 2.4 million bpd, according to a Reuters survey of 17 analysts and consultants, down from 2.7 million bpd of growth last year.
Top oil producer Saudi Arabia has said it is now pumping slightly less than 9 million barrels per day (bpd), down more than 500,000 bpd since December.
Regional Middle East tensions are supporting prices as OPEC's second biggest producer Iran and minor non-OPEC producer Syria, both locked in rows with the United States, said on Wednesday they will form a common front against threats.
"We are ready to help Syria on all grounds to confront threats," Iranian Vice-President Mohammad Reza Aref said in Tehran after meeting Syrian Prime Minister Naji al-Otari.
The United States on Tuesday recalled its ambassador to Syria to show its displeasure with Damascus, while acknowledging they do not know who was to blame for former Lebanon Prime Minister Rafik al-Hariri's car-bomb assassination on Monday.
Prices briefly jumped following reports on Iranian state television that an unknown aircraft fired a missile in southern Bushehr province where Iran has a nuclear power plant. Iran's Revolutionary Guards said later that there had been no attack.
And in Iraq, officials said on Wednesday that sabotage attacks has stopped crude oil exports through Iraq's northern pipeline to Turkey after running sporadically for barely a day.
Iraq only restarted crude exports along the pipeline from its northern fields on Monday, reopening a route that had been closed by sabotage since December.