A surprise build of U.S. crude and gasoline stocks wasn't enough to derail crude trading optimism on Wednesday, founded by expectations that the Organization of Petroleum Exporting Countries (OPEC) on Thursday may deepen their supply cuts despite recent internal squabbling.
Brent settled up $1.42, or 1.7 percent, to $83.10 per barrel, while West Texas Intermediate settled up $1.45, or 1.9 percent, to $77.86 per barrel.
Sources close to OPEC told media that additional cuts were being focused on ahead of the cartel's meeting, with as much as 1 million barrels per day (bpd) on the negotiating table.
OPEC and its allies currently provide over 40 percent of global supply and already have cuts in place of about 5 percent of global demand.
Stewart Glickman, analyst at CFRA, said, "All eyes are on the Nov. 30 OPEC meeting, and the fine details will matter."
Rebecca Babin, a senior energy trader at CIBC Private Wealth, added, "The anxiety brewing in the crude market heading into tomorrow's meeting is palpable; there have been some fundamental developments" elsewhere in markets, "but the shadow cast by the OPEC meeting supersedes all other data."
Completely overlooked by enthusiastic traders was the question of whether OPEC's initiatives would make a difference: earlier, the International Energy Agency posited that even if members extend their cuts into next year, there will still be a slight surplus of stocks around the world in 2024.
Also overlooked by traders was the Energy Information Administration reporting a surprise build of 1.6 million barrels in U.S. crude, gasoline and distillate fuel stocks last week, indicating weak demand; expectations were that crude stocks would fall by about 2 million barrels.
In other oil news on Wednesday, the U.S. Department of Treasury imposed new sanctions on an additional 20 organizations and individuals in Iran, including Sepehr Energy – which Washington says is a front company for Iranian government oil sales that are funding Iran's "destabilizing regional activities" and supporting "multiple regional proxy groups", including Hezbollah and Hamas.
The sanctions come as Iran increased its crude output to 3.1 million bpd for October, making it third place among OPEC producers.