Oil prices extend rally, shrug off US stock build

Oil futures rose on Wednesday, shrugging off an industry report that showed an unexpected build in U.S. crude stocks, and adding to gains of nearly 6 percent from the previous session.

Oil prices had surged on Tuesday as members of the Organization of the Petroleum Exporting Countries (OPEC) were set to renew efforts on concrete steps to implement a deal on cutting output in the face of a persistent global glut.

U.S. benchmark crude was up 14 cents at $45.94 a barrel at 0532 GMT. On Tuesday, the contract surged 5.8 percent to $45.81 per barrel in its biggest intraday percentage rise since early April.

Brent futures, the global benchmark, rose 20 cents to $47.15, after spending most of the Asian session in negative territory. They settled up 5.7 percent at $46.95 a barrel in their largest percentage gain since Sept. 28.

Both contracts had opened lower after Asian trading started following an after-hours report on Tuesday from the U.S. industry group, the American Petroleum Institute (API), that showed crude stocks rose last week.

“Given the size of the move and that the market finished pretty to its highs it is a situation that likely favours the move continuing a little longer,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

OPEC agreed to an outline of a supply cutting deal in September but with two weeks to go before a Nov. 30 meeting, disagreements persist among members and non-OPEC Russia on crucial details.

OPEC secretary-general Mohammed Barkindo will travel to member nations, including Iran and Venezuela, over the next few days to discuss the deal.

“Should an agreement to limit production come through, it will be the first in eight years,” Jingyi Pan, market strategist at IG in Singapore, wrote in a note.

“There remains event risks from U.S. inventory reports in addition to non-OPEC members’ stance that could jeopardize the current recovery pace of oil prices,” Pan said.

Crude inventories climbed by 3.6 million barrels to 488.8 million barrels in the week ended Nov. 11, the API report showed, compared with analyst expectations for an increase of 1.5 million barrels.

Official figures on stockpiles from the U.S. Energy Information Administration are due later in the day.