Oil prices rise to hover at mid-US$58 a barrel ahead of OPEC meeting

Oil prices gained Thursday on figures showing that supplies of U.S. gasoline and other refined products fell in the most recent week, and ahead of an OPEC meeting later in the day.

The market also got a lift from Wall Street's recovery from its plunge Tuesday that stirred concerns about the U.S. economy's health and future demand for energy.

Traders expect ministers from Organization of Petroleum Exporting Countries to keep their output targets steady when they meet in Vienna, Austria, later Thursday. Some analysts have pointed out that maintaining current OPEC quotas could leave the market with a surplus in the second quarter, which could hurt prices.

"The market is waiting for the OPEC meeting today," said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo. "People may be nervous about it, and are short-covering in case prices go up after the meeting."

Light, sweet crude for April delivery rose 36 cents to US$58.52 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. The contract on Wednesday edged up 23 cents to settle at US$58.16 a barrel.

April Brent crude on the ICE Futures exchange in London gained 24 cents to US$61.30 a barrel.

Meanwhile, traders gauged the violence in Nigeria, Africa's biggest crude producer, where militants released two Italian oil worker hostages who were seized more than three months ago. But the militants vowed more kidnappings of oil workers and attacks on oil installations.

"We will step up our attacks against creek- and land-based installations around the delta. Car bombs will also be freely utilized within and outside the Niger Delta," the Movement for the Emancipation of the Niger Delta said, adding the freed Italians "will be replaced by other hostages who will again be taken off oil installations thought to be secure."

More than a year of stepped-up violence in the Niger Delta has cut daily output in Nigeria by nearly one quarter.

Wednesday's weekly petroleum inventories report from the U.S. show that crude oil stocks rose less than expected from the previous week. The Energy Department said crude inventories rose last week to 325.3 million barrels, up by 1.1 million barrels. Analysts surveyed by Dow Jones Newswires expected a bigger gain of 1.4 million barrels.

Gasoline inventories fell by 2.5 million barrels last week, above expectations of a 2.1 million barrel decline. Inventories for distillate stocks which include heating oil and diesel fuel fell by 2.8 million barrels, more than estimates of a 1.9 million barrel drop.

Demand for both gasoline and distillate fuel increased last week from the same period last year.

However, inventories for crude, gasoline and distillates remain at the upper end of average for this time of year, reports AP.

Heating oil futures added 0.46 cent to US$1.7136 a gallon (3.8 liters) while natural gas prices fell slightly to US$7.076 per 1,000 cubic feet.