Oil closed higher on Thursday, snapping a three-day loss, as strong US economic data bolstered crude markets but focus remained on whether Opec will cut output to end a five-month long selloff when it meets next week. Factory activity in the US mid-Atlantic region grew at its fastest pace in two decades, US home resales jumped to their highest in more than a year in October, and a gauge of future US economic activity gained more than expected last month.
Chances have also risen in recent days that the Organisation of the Petroleum Exporting Countries will agree on reducing production when it meets on November 27, analysts said. Benchmark Brent oil settled up $1.23 at $79.33 a barrel, after a session high at $79.46.
US crude finished up $1 at $75.58 after an intraday peak of $75.76. "The market seems to be riding the wave of the strong US data. There's also growing speculation that Opec may do something to support prices," said Phil Flynn, analyst at Price Futures Group in Chicago.
Higher demand for heating oil from unseasonably cold US weather also helped, said Harish Sundaresh, commodity strategist and portfolio manager at Boston's Loomis, Sayles & Co, which manages $220 billion. "The US is very short heating oil inventory going into the winter months," Sundaresh said. Front-month heating oil futures closed up nearly 1 percent at $2.38 per gallon.
US crude stockpiles unexpectedly jumped 2.6 million barrels last week although inventories of distillates, including heating oil, fell by 2 million barrels. Fear of prolonged low prices for oil have pushed some US producers such as Apache Corp, Continental Resources Inc and Denbury Resources Inc to budget less on drilling next year. Opec members Iran, Venezuela and Libya are calling on the group to cut production to support prices, which have sunk more than 30 percent since June to four-year lows, as US output of high quality, light shale crude overwhelms demand in a lacklustre global economy. Market bets on the outcome of the Opec meeting varied sharply, with analysts at Austria's JBC Energy expecting a 1 million-barrel-per-day cut at least, while New York-based consultancy Eurasia Group expects none.
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