Oil jumps 3% on US stockpiles drop; further OPEC output cuts seen

Oil prices surged more than 3%  on expectations that OPEC and allied producers would extend production curbs, and as US government data showed a large drop in domestic crude stockpiles.

Brent crude LCOc1 futures ended the session up $2.18, or 3.6%, at $63 a barrel after climbing to as much as $63.51. US West Texas Intermediate (WTI) crude CLc1 futures settled up $2.33, or 4.2%, at $58.43 after touching a session high of $58.66 a barrel, Reuters reported.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, could approve deeper crude output cuts when they meet in Vienna this week.

US crude stocks fell by 4.9 million barrels in the week to Nov. 29 as refineries hiked output, the Energy Information Administration said, a much deeper draw than expected. Analysts had forecast a decrease of 1.7 million barrels.

“A jump in refining activity and ongoing subdued net imports have helped yield the first draw to oil inventories in six weeks,” said Matt Smith, director of commodity research at ClipperData.

OPEC members meet on Thursday, with the OPEC+ group meeting the following day. OPEC+ has been curbing supply since 2017 and is expected to keep the cuts in place to balance out record production in the United States.