Oil ends volatile day above $80

NEW YORK (CNNMoney.com) -- Oil prices ended up over $80 a barrel Wednesday, capping off a volatile day of trade after the government said supplies of crude and distillates rose unexpectedly.

U.S. light crude for November delivery rose 77 cents to settle at $80.30 a barrel on the New York Mercantile Exchange. Oil began the session up over $1, then traded down over $1 following the report's release.

In its weekly inventory report, the Energy Information Administration said crude stocks rose by 1.8 million barrels last week. Analysts were looking for a drop of 2 million barrels, according to a Dow Jones poll.

Distillates, used to make heating oil and diesel fuel, also rose unexpectedly, increasing by 1.6 million barrels compared to the 1.1 million barrel drop predicted.

Gasoline supplies increased by 600,000 barrels, more than the 100,000 barrel gain expected.

"Obviously, the market seems shocked," Phil Flynn, a market analyst at Alaron Trading in Chicago, said just after the report's release. "But I don't think it's going to change the trend of falling supplies. This is the first build we've seen in five weeks."

EIA said refineries ran less than expected, operating at only 86.9 percent capacity. Flynn said supplies rose due to increased imports and a dip in demand, a situation he did not expect to continue.

"I'm not looking for a big move down [in oil prices]", he said.

Oil hit an all-time trading high of $83.90 last week as the October contract expired. November's contract had fallen for the last three sessions straight and hasn't traded above $83 a barrel.

Some analysts predict crude is set to drop $10 to $15 a barrel over the next couple of months as the fundamentals aren't there to support $80 oil. Others say $100 a barrel is just around the corner, especially in the event of a surprise disruption in supplies.

Traders are also watching several storms nearing the oil-rich Gulf of Mexico, but as of now none are thought to pose an immediate danger.