Oil rises above $65 as OPEC holds steady
OPEC decision to hold daily production quota at 25 million barrels and a government report showing falling crude supplies support rising oil prices.
NEW YORK (CNNMoney.com) -- Oil rose above $65 a barrel Thursday after OPEC decided to leave the group's crude production unchanged and an inventory report showed an unexpected decline in supply.
Light, sweet crude for July delivery rose $1.63, or almost 2.6%, to settle at $65.08 a barrel Thursday.
That's the highest settlement price since Nov. 5, and marks the sixth day in a row that crude has settled above $60.
The Organization of Petroleum Exporting Countries - whose members produce about 40% of the world's crude - met Thursday in Vienna to determine production levels.
The group decided to hold the quota at 24.85 million barrels per day, according to reports.
"Stay the course, that's the decision," said Saudi Arabia's oil minister, Ali al-Naimi, according to Reuters.
OPEC cuts production levels in order to prop up oil prices by reducing supply. Starting in late 2008 OPEC announced reductions of 4.2 million barrels a day. The cartel has reported that most member nations have complied with the production cutbacks.
On Wednesday, al-Naimi had said the global economy could handle oil prices as high as $75 to $80 a barrel, according to reports from Reuters.
"We see offshoots of recovery," he added Wednesday. "There are a lot of positives in what I say because I am seeing a recovery."
Inventory report: In its weekly supply report, the Energy Information Administration said stockpiles of oil fell 5.4 million barrels in the week ended May 22. A consensus estimate of industry analysts surveyed by energy information provider Platts predicted a 1.8 million barrel increase.
Supplies of distillates, which are used to make heating oil and diesel, rose 300,000 barrels. Analysts expected an increase of 750,000 barrels.
Gasoline: The EIA report also said gasoline stocks fell 600,000 barrels, while analysts predicted a decline of 1.7 million barrels.
Prices at the pump continue to tick higher heading into the peak summer driving season. The national average price for a gallon of regular unleaded gasoline rose to $2.449 from the previous day's price of $2.434, according to motorist group AAA.