Oil gains on U.S. inventory report

NEW YORK (CNNMoney.com) -- Oil prices settled slightly higher Wednesday after the government reported a surprising jump in both distillate and gasoline inventories but a bigger than expected dip in the supply of crude.

U.S. light crude for February delivery rose 26 cents to settle at 63.72 a barrel on the New York Mercantile Exchange.

In its weekly inventory report, the U.S. government's Energy Information Administration said crude stocks declined sharply by 6.3 million barrels last week. Analysts were looking for a decline of 1.7 million barrels, according to Reuters.

Distillates, used to make heating oil and diesel fuel, jumped by 1.2 million barrels, while gasoline supplies jumped by 1 million barrels. Analysts were looking for a decline of 800,000 barrels in distillate supplies and a gain of 100,000 barrels in gasoline stockpiles.

"We did have a build in refined products, so from that standpoint it [the report] was somewhat bearish but not really surprising other than crude" said Brian Hicks, co-manager of the Global Resources Fund at U.S. Global Investors. "For the most part, it was pretty much in line from our standpoint."

EIA also said that U.S. crude oil imports averaged 8.9 million barrels per day last week, down 696,000 barrels per day from the previous week.

U.S. oil imports have been slowed recently because of dense fog along the Gulf Coast, prompting refiners to rely on existing inventories.

The shipping delays coincide with a decision last week by the Organization of Petroleum Exporting Countries (OPEC) to cut supply by 500,000 barrels per day as of Feb. 1.

OPEC, which supplies more than a third of the world's oil, agreed to cut production by 1.2 million barrels per day effective in November, its first reduction in more than two years.

But OPEC has not been able to deliver on that promised reduction, with most estimates saying the cartel has achieved somewhere between half and three-quarters of the proposed cut.

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.

Stocks of oil majors, including BP (down $0.93 to $66.96, Charts), ExxonMobil (down $0.65 to $76.34, Charts), ConocoPhillips (down $0.15 to $72.88, Charts), Chevron (down $0.32 to $74.17, Charts) and Royal Dutch Shell (down $1.33 to $70.17, Charts), stopped mirroring crude prices in mid-September and rebounded as traders bet on rising oil prices and looked for deals in a sector many saw as undervalued.

But over recent weeks the traditional relationship - with oil stock prices tracking the cost of crude - has been re-established.

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