OIL PRICE: ABOVE $58 AGAIN
Brent crude, the global benchmark, was up 8 cents at $58.41 a barrel by 0646 GMT, after settling on Tuesday up 96 cents, or 1.7 percent. U.S. West Texas Intermediate crude was trading down 9 cents at $52.38.
Saudi Arabia's Energy Minister Khalid al-Falih said on Wednesday the focus remained on reducing oil stocks in industrialized countries to their five-year average and raised the prospect of prolonged output restraint once an OPEC-led supply-cutting pact ends.
The Organization of the Petroleum Exporting Countries (OPEC), plus Russia and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to March 2018, but they are considering extending it.
"OPEC is holding a line on the production cuts," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. "Even though shale (output) is now rebounding, the stocks are drawing, and now we're heading into the winter season, so the market is strong."
U.S. crude stocks rose by 519,000 barrels last week, industry group the American Petroleum Institute said on Tuesday. That compared with analysts' expectations for a decline of 2.6 million barrels.
Gasoline inventories fell by 5.8 million barrels, compared with analysts' expectations for a 17,000 barrel decline. Distillate fuel stockpiles, which include diesel and heating oil, fell by 4.9 million barrels, compared with expectations for an 860,000 barrel drop, the API data showed.
Following the large drop in gasoline stockpiles, U.S. gasoline futures rose as high as $1.7383 per gallon, the most since Sept. 26. The profit margin for gasoline over WTI climbed to as much as $18.60 a barrel, the highest in a month.
The U.S. Energy Information Administration will release official government inventory data later on Wednesday.
The disruptions to exports from Iraq, OPEC's second-largest producer, amid geopolitical tensions in the country have pushed up oil prices.
The Kurdistan Regional Government offered on Wednesday to put an independence referendum on hold as part of efforts to end the military confrontation with Iraqi forces and resolve the crisis with the central government in Baghdad through dialogue.
Iraqi forces are about to launch an offensive to recapture the last patch of Iraqi territory still in the hands of Islamic State, the military said.