Oil rises to 15-Month High as US supplies shrink

Oil advanced to a 15-month high in New York after the government reported that US crude inventories unexpectedly fell last week and Saudi Arabia's energy minister said many nations are willing to join OPEC output cuts.

Futures jumped as much as 3.3 per cent to the highest since July 2015. The Energy Information Administration reported a 5.25 million-barrel decline in nationwide crude supplies to the lowest level since January in the week ended October 14. Analysts surveyed by Bloomberg had forecast a 2.1 million-barrel increase. OPEC can continue to stabilise the market and other nations have given "strong signals" they will cooperate, Saudi Arabia's Minister of Energy and Industry Khalid Al-Falih said in London.

"It's a big draw. It's a bit of surprise for the market because we are also in peak turnarounds and that's what makes it so impressive," Amrita Sen, chief oil economist for Energy Aspects in London, said by telephone. Imports to the US have dropped significantly, she said. "If then, on top of this, the OPEC cuts do materialise, our view is that we can see $US60 by year-end. A lot depends on what happens between now and November 30."

Oil has fluctuated near $US50 a barrel amid uncertainty about whether the Organisation of Petroleum Exporting Countries will be able to implement an accord to reduce crude supply when they gather at an official meeting in November. An OPEC committee will meet later this month to try to resolve differences over how much individual members should pump. OPEC will start with an output freeze, or possibly a small cut, Al-Falih said.

"The perception in the oil market is that it's much more risky to be short, better to be neutral or long. That has everything to do with OPEC," Michael Wittner, the New York-based head of oil-market research at Societe Generale, said by telephone. Today's inventory report may have been "magnified a bit, because it's in line with a market that's now predisposed to be bullish".