Oil tops $62 as inventories fall

NEW YORK (CNNMoney.com) -- Oil prices rose Wednesday, hitting a two-month high, after the government said supplies of distillates and gasoline showed a surprise decline and cold weather looked set to bear down on the U.S. Northeast, the world's largest home heating oil market.

U.S. light crude for January delivery gained $1.47 to settle at $62.46 a barrel on the New York Mercantile Exchange. Oil had traded up 21 cents just prior to the report's release.

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In its weekly inventory report, the Energy Information Administration said distillate supplies, used to make heating oil and diesel fuel, fell by 1 million barrels. Analysts were looking for a gain of 400,000 barrels.

Gasoline supplies also posted a surprise decline. EIA said gasoline stockpiles fell by 600,000 barrels, compared to the 500,000-barrel increase called for by analysts. Crude stocks fell by 300,000 barrels, slightly more than the 100,000-barrel drop predicted.

Crude stocks for this time of year are still well above average, while distillates and gasoline supplies are about average, EIA said.

Oil prices have risen more than $3 this week as forecasters call for a cold spell to snap the current warm weather in the northeastern United States.

Temperatures in New York have been in the low to mid-60s, above average, for the past several days, which has sapped demand for heating oil.

But by the weekend they are predicted to fall into the 40s, below average, and then to slip even lower next week.

Oil traders have also been listening to talk from OPEC to see if the cartel plans on any more production cuts.

OPEC ministers, who next meet on Dec. 14 in Nigeria, have voiced concern about high inventory levels.

But Kuwait's energy minister, Sheikh Ali al-Jarrah al-Sabah, said Wednesday the producer group would not need to cut again if prices held near $61 a barrel.

"In my personal opinion, if prices maintain these levels, I don't imagine that there is a need for a reduction," he told Reuters.

Leading OPEC minister Saudi Arabia's Ali al-Naimi said Wednesday the kingdom wanted fair and stable oil prices but was not prepared to act alone to maintain market balance.

"The kingdom is not prepared in any way to be alone in the task of balancing the market through what is known as swing production, whereby the kingdom cuts production on its own to maintain prices while others [producers] do not," he told Reuters.

OPEC has already agreed to cut output by 1.2 million barrels per day from Nov. 1, although analysts have said the group has not cut by the full amount.

Analysts have said Saudi Arabia is one of the few OPEC members that has actually abided by the announced cuts.

Oil prices have fallen more than 25 percent from highs reached in July and have been range-bound near $60 for the past several weeks.

But stocks of oil majors, including BP (Charts), ExxonMobil (Charts), ConocoPhillips (Charts), Chevron (Charts) and Royal Dutch Shell (Charts), have stopped mirroring crude prices and have rebounded since mid-September as traders bet oil prices will rise and search for deals in a sector many see as undervalued.

--from staff and wire reports

Correction: An earlier version of this story incorrectly said oil prices rose $96; it should have read 96 cents. CNNMoney.com regrets the error.

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