Oil jumps on energy report

NEW YORK (CNNMoney.com) -- Oil prices jumped Wednesday after a report showed supplies of distillates, used to make heating oil and closely watched ahead of winter, showed a surprise decline.

Light, sweet crude oil rose 83 cents to $59.76 a barrel on the New York Mercantile Exchange. Oil jumped up 62 cents immediately after the report's release.

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In its weekly inventory report, the Energy Information Administration said crude stocks rose by 400,000 barrels last week. Analysts were looking for a gain of 700,000 barrels, according to Reuters.

Distillates, used to make heating oil and diesel fuel, fell by 2.7 million barrels, while gasoline supplies dropped by 600,000 barrels. Analysts were looking for a 500,000-barrel drop in distillates supplies and no change in gasoline stockpiles.

"The bullish tone is diluted by the fact that in the distillate breakdown, heating oil stocks actually rose by 300,000," BNP Paribas said in a note according to Reuters.

High inventory levels have worried OPEC ministers, and Gulf members of the producer group, who met in Abu Dhabi on Wednesday, said they were fully committed to the cut of 1.2 million barrels per day (bpd) agreed in Doha last month.

"All of OPEC is committed [to the cuts]," United Arab Emirates Oil Minister Mohammed bin Dhaen al-Hamli said.

Ministers, including Saudi Oil Minister Ali al-Naimi, have said the market remains oversupplied and that further cuts could be agreed at the producer group's next meeting in Dec. 14.

High inventory levels, combined with skepticism about OPEC's commitment to production cuts have helped to pull prices down from the record high of $78.40 for crude in July.

Oil prices have tumbled about 25 percent since then on swelling stockpiles, a cooling of tensions in the Middle East, a hurricane season that never materialized and concerns over a slowing economy.

After a steep sell-off in August and September, oil prices stabilized in October and fell in the first week of November, remaining below the $60 mark.

But Goldman Sachs said inventories were progressively being eroded by stronger than expected demand.

"We continue to believe that the recent, lower oil price levels will prove short-lived, particularly as the lower prices have contributed to exceptionally strong demand growth in the U.S.," the investment bank wrote in a report according to Reuters.

It maintained its price forecast of $75.50 for U.S. crude next year.

-- from staff and wire reports

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