Oil fell more than 2 percent to near fresh 2006 lows on Wednesday as swelling US crude inventories offset a likely cut in production by exporter cartel Opec. US light crude for November settled down $1.28 at $57.65, the lowest settlement since $57.59 on October 11. London Brent crude fell $1.36 to $59.58 a barrel.
Oil has fallen from record highs of $78.40 struck in mid-July, weighed down by bulging inventories running well over historical norms. US crude stocks rose 5.1 million barrels last week, the Energy Information Administration said in a weekly report, surpassing analysts forecasts for a 1.3 million barrel build. The increase brought current inventories to 335.6 million barrels, well over the five-year average of 294 million barrels, according to the EIA.
Domestic distillate stocks, which include heating oil, fell a larger-than-expected 4.5 million barrels last week, while gasoline dropped 5.2 million barrels. "The build in crude was so big it put a damper on the bullish products data," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Ministers from the Organisation of the Petroleum Exporting Countries will meet in Qatar on Thursday to clear a deal to remove 1 million barrels from daily output in an attempt to stem oil's slide from July's record.
Kuwait's energy minister said some hawkish Opec oil ministers were pushing for an even deeper output reduction. "They feel that one million may not have any impact on oil prices. That's the thinking of some, I feel this thinking is there, we'll see it when we meet," Sheikh Ali al-Jarrah al-Sabah told Reuters in an interview.
Opec member Venezuela made a second cut in its oil production this month, slicing a further 50,000 bpd from its output this week after a cut of the same amount on October 1, a senior official with state oil firm PDVSA told Reuters.
The group is divided on whether it should cut the output from actual production of roughly 27.5 million barrels per day (bpd) or from its nominal 28 million-bpd ceiling, a disagreement analysts say has hurt Opec's credibility. Qatari Oil Minister Abdullah al-Attiyah said on Wednesday he believed the cut would come from actual production.