Oil prices jumped on Wednesday as expectations for tighter fuel inventories surfaced as the Norther Hemisphere moves into the winter season.
U.S. crude jumped $1.04 to $81.30 a barrel by 2:30 p.m. EDT, after gaining more than $1.24 on Tuesday. London Brent crude rose $1.11 to $78.60.
Europe's oil inventories declined in September according to Euroilstock, while forecasts for colder weather also raised forecasts on
Europe's oil inventories declined in September, industry monitor Euroilstock said on Tuesday, while forecasts for colder weather this year in the United States has led to expectations of higher demand for heating oil.
Oil prices have been holding around the $80 mark since striking a record $83.90 in mid-September.
The Organization of the Petroleum Exporting Countries agreed last month to increase production by 500,000 barrels per day, effective November 1, but energy analysts have said the boost would do little to avert a supply squeeze.
Goldman Sachs said Wednesday there were few signs yet of the increased OPEC output and predicted inventories could be at historically low levels by the end of the year.
Little of this oil will likely arrive in consuming regions before the end of the year, the bank said. As a result, we expect a rare counter-seasonal drawdown in OECD oil inventories during 3Q 2007.
U.S. weekly oil inventory data, due on Thursday, were expected to show a 900,000-barrel increase in crude stocks, a 400,000-barrel decline in distillates -- including heating fuel -- and a 100,000-barrel rise in gasoline.