NEW YORK (CNN/Money) -
Oil prices took another turn Wednesday to close higher after first rising then falling midday, following a government report showing a smaller-than-expected rise in oil and fuel inventories.
The report also showed that supplies of heating oil stocks were at the low end of the average supply range.
U.S. crude for January delivery rose 48 cents to settle at $41.94 a barrel. In London, Brent gained 42 cents to settle at $38.69 a barrel.
Despite Wednesday's modest gains, crude prices have tumbled 18 percent in the previous seven sessions, as warmer-than-normal temperatures in the Northeast eased worries about supplies of winter heating oil. The Northeast is the world's largest market for home heating oil.
Inventories of distillate fuel, including heating oil, rose by 1.4 million barrels last week, the federal Energy Information Administration (EIA) reported, but analysts had forecast a bigger increase of about 1.5 million barrels, according to a survey by Briefing.com.
Moreover, a great deal of the increase was seen in low-sulfur distillate fuel, or diesel fuel, rather than in heating oil, the EIA said.
The data showed that heating oil inventories rose by less than 100,000 barrels to 50 million barrels. This put supplies just below the lower end of the average range for this time of year, the EIA said in a statement.
Traders have also wondered about an oversupply of crude on the market, which has pressured prices.
"The market thought that, with extremely warm temperatures in the Northeast and refiners pumping near capacity, heating oil supplies would go through the roof," said Phil Flynn, an oil analyst with Alaron Trading. "Now we're left wondering what would happen if [it] really set in, if it actually got cold," he added.
Traders were so preoccupied by the distillate data that they shrugged off news that crude inventories rose by 600,000 barrels last week to 292.9 million barrels, according to the EIA. Forecasts were for a decline of 750,000 barrels.
Crude stocks are in the middle of the average range for this time of year, the EIA said.
Total motor gasoline inventories increased by 2.4 million barrels last week to 208.1 million, handily beating forecasts for a 1.9 million barrel rise and putting gasoline stocks at the top of their average range, the EIA said.
OPEC response?
Nervous OPEC members gearing for Friday's ministerial meeting wondered if they should rein in a supply surge that has slashed crude prices, with Saudi Arabia the only oil-producing nation saying not to scale back production.
OPEC in recent years has consistently cut production to prevent stocks building and to deter big-money speculative funds from betting on a fall in prices.
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And a fall in the dollar's value has further eroded OPEC's revenues from its sales, denominated in U.S. currency. The euro price for OPEC's crude reference basket is up only 8 percent this year.
Analysts said today's EIA release and the turnaround in U.S. light crude could take pressure off the cartel to cut production.
"If prices jump another $5, I think it will give the Saudis a stronger hand, but continued weakness will give OPEC hawks more power," said Alaron's Flynn.
Crude prices are still nearly 30 percent above the start of the year after strong demand growth in China and the United States has strained supplies.
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