WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange rallied in afternoon trade Wednesday, with West Texas Intermediate settling 4% higher in response to a large drop in U.S. crude oil stocks during the week of Nov. 29 and supportive comments from key officials with the Organization of the Petroleum Exporting Countries. The producer group is pushing for further restrictions on supply at their biannual meeting starting Thursday.
At settlement, NYMEX January West Texas Intermediate futures surged $2.33 to $58.43 per barrel (bbl) and ICE February Brent contract moved up $2.18 to $63 bbl. NYMEX January ULSD futures spiked 4.3 cents to $1.9229 gallon and NYMEX January RBOB futures increased 4.13 cents to $1.6042 gallon.
Oil prices remained on the offensive during the afternoon session Wednesday after federal data reported U.S. crude supply fell by a much larger-than-expected 4.9 million bbl, making it the first drawdown in six weeks.
The large draw was realized as domestic refineries sharply increased crude inputs during the last week of November, moving stocks into closer alignment with the five-year average. U.S. refinery run rate jumped 2.6% to a 91.9% last week. EIA data also showed an eighth consecutive weekly draw from the Strategic Petroleum Reserve and the fourth straight draw from Cushing supply hub in Oklahoma -- the delivery location for the New York Mercantile Exchange WTI futures contract.
Total commercial petroleum inventories dropped 4.9 million bbl last week, although products posted sizable builds in the reviewed week.
As concerns over glutted U.S. crude inventories are fading, wire services reported OPEC's key members were considering deeper production cuts at this week's OPEC/non-OPEC meeting in Vienna. According to Iraq Oil Minister Thanmer Ghadhan, Saudi Arabia prefers to increase production curbs to 1.6 million barrels per day (bpd) from the current 1.2 million bpd. Market's consensus is now calling for a more aggressive stance by the OPEC+ alliance to counter an expected oversupply global market next year.
According to the CME OPEC's Watch Tool, investors are currently pricing in 52.24% chance of deeper output cuts versus 45.70% to maintain cuts unchanged and only 2.05% chance that output would be increased.
Midsession Wednesday, markets were also boosted after a Bloomberg report indicated a U.S.-China trade deal is still in the works, despite the harsh rhetoric from both sides. U.S. equities ended the session higher after a slump on Tuesday amid renewed concerns over escalating global trade tensions.
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