Report: OPEC has lived up to production cut pledge

On the news that stockpiles of crude oil and oil products were lower last week, oil prices were up significantly on Wednesday. West Texas Intermediate crude for January delivery gained 88 cents to $61.87 per barrel on the New York Mercantile Exchange. Meanwhile, in London, January contracts for Brent crude were $1.17 higher to $62.38 per barrel. Nymex December unleaded gasoline added 2.4 cents to $1.6506 per gallon, while December heating oil was up 4.2 cents to $1.7703 per gallon.

The Energy Information Administration reported that crude oil inventories in the US dropped by 300,000 barrels in the week ending November 24. Crude stockpiles had been expected to drop, but only by 100,000 barrels during the week. Gasoline inventories were also down, by 600,000 barrels, when they had been expected to rise by 500,000 barrels. Heating oil stockpiles were down by 1 million barrels against an expected rise of 400,000 barrels in storage. Demand for distillates was up by 7.1 percent over last year at the same time, to 4.35 million barrels per day in the past four weeks. Refinery utilization was up by 1 percent last week, to 88.1 percent.

A report from the PIRA Energy Group indicated that OPEC has indeed lived up to its promise to cut production by 1.2 million barrels per day as exports for the four weeks ending November 19 were down by 1.28 million barrels per day.

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