Oil back above $56 despite OPEC

Crude oil prices surged above $56 a barrel this afternoon after mixed data on US stockpiles left the market unsettled.

The Department of Energy (DoE) said crude oil reserves fell 1.8 million barrels to 339 million in the week ending June 10, noting that the reserves remain well above averages for this time of year. The American Petroleum Institute said its survey showed a rise of 4.49 million barrels to 328.35 million, after a sharp drop the previous week.

Crude oil futures jumped $1.50 to $56.50 a barrel on the New York Mercantile Exchange after the news, the first rise above $56 in two months. In London, Brent was up 93 cents to $54.66, having earlier moved above $55.

Petrol reserves fell 900,000 barrels to 215.7 million, according to the DoE. The API estimate a rise of 97,000 barrels to 214.71 million. Distillates, used for heating oil and diesel, rose 2.5 million barrels to 110.2 million, the DoE said. API figures showed an increase of 1.9 million barrels to 110.31 million.

The oil market appeared to be unmoved by an earlier OPEC decision to raise its production ceiling by 500,000 barrels per day on July 1. OPEC added that it might repeat the move by September.

A statement after the cartel's meeting in Vienna said the move was motivated by high prices and forecasts of  strong global demand during the rest of the year.

Ministers have opted to give OPEC president Sheikh Ahmed Fahd al-Sabah a mandate to increase the quota again before September if he decides that such a move is what the market needs.

The statement said the president might announce an additional 500,000 bpd day hike 'should oil prices remain at current levels or continue to rise further'.

OPEC ministers have repeatedly said a quota increase would be a largely symbolic gesture, as OPEC is already pumping over the quota limit and the market is well supplied. They said a shortage in refining facilities was the real reason for spiralling prices, with OPEC members having limited leverage to resolve the problem.