World oil prices rose on Wednesday after an unexpected fall in US crude oil stocks overshadowed healthier gasoline and heating oil inventories, traders said.
Easing concerns about product tightness in the world's biggest energy consumer were countered by the surprise drop in crude supplies, keeping the market on edge amid a taut global supply chain and concerns about Middle East security.
US light crude for September delivery settled 14 cents higher at $40.58 a barrel, after hitting a session high of $41.15, only $1.30 below an all-time peak from early June.
London benchmark Brent crude ended up 15 cents at $37.16 a barrel, but volume was thin with individual "local" traders boycotting the session over a possible proposal to shorten trading hours.
The market dipped in early afternoon after the US Energy Information Administration reported an unexpected rise last week in gasoline inventories and a greater-than-expected increase in distillate stocks.
Those figures overshadowed a fall in crude oil supplies of 3.6 million barrels to 299.3 million barrels, which was in sharp contrast to analysts' forecast for a modest increase.
Lingering concerns about the thin cushion of global oil production remained stuck in traders' minds, lifting the market from brief lows as Opec looked to be pumping even more crude than previously estimated.
The cartel is on track to produce just over 30 million barrels per day in July, according to a revised estimate by consulting firm Petrologistics. This leaves the cartel a waning cushion of surplus capacity with which to compensate for any disruptions to global supplies.
The strongest demand growth in nearly a quarter of a century has heightened concerns over a lack of spare capacity at a time of geopolitical tensions in Iraq, Saudi Arabia, Nigeria, Venezuela and Russia - all major oil-producing nations.
The Opec producers' cartel, which cancelled a policy meeting scheduled for Wednesday, will raise its official output ceiling by 500,000 bpd from August 1 to 26 million bpd, although actual group production is estimated at roughly 2 million bpd above that level.
Some analysts said traders were more focused on the oil products market and the ample supplies shown in the EIA data.
On the demand side, the EIA said implied gasoline demand fell 5 percent, compared with the previous report.
Gasoline prices initially fell as much as 86 cents to $1.2380 a gallon on Wednesday afternoon, having fallen 6 percent in the last week, before settling at $1.2428.
"People have been more concerned about products than crude," said Kyle Cooper, an analyst with Citigroup Global Markets.
Gasoline inventories are now 5 million barrels, or 2.5 percent, higher than this time last year, giving traders greater confidence that supplies will ride out the remainder of the peak US summer driving season.
"We're home free for the summer," said Jim Ritterbusch, president of Ritterbusch and Associates.
US gasoline consumption accounts for roughly 12 percent of global oil demand during the summer, making it a barometer for overall strength in demand.
A 1.7 million barrel increase in distillate stocks also soothed worries that heating oil supplies were not rising quickly enough to meet wintertime demand if a cold snap were to descend quickly on the US Northeast.
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