Oil prices settled near $83 a barrel Wednesday after crude inventories grew less than expected last week, and the stock market rose on the Fed's promise to keep interest rates at record lows. Benchmark crude for April delivery rose $1.23 cents to settle at $82.93 a barrel on the New York Mercantile Exchange. London Brent crude rose $1.06 to $81.59 having earlier hit a two-month high of $81.72. The Energy Information Administration said crude inventories rose last week by a million barrels to 344 million barrels. The 12-nation Organization of Petroleum Exporting Countries meeting in Vienna has decided not to cut back production targets, sticking with levels held since December 2008. Oil extended gains to above $82 a barrel on Wednesday, rising to within $2 of this year's high as Saudi Arabia's Oil Minister Ali Al-Naimi described prices as “beautiful” and OPEC decided to leave output targets unchanged. OPEC, which pumps roughly one in every three barrels of oil, agreed to keep record output curbs of 4.2 million barrels per day (bpd) in place. Since agreeing to cut output to below 25 million bpd in December 2008 as the economic crisis intensified, OPEC has seen prices rally from lows below $40 a barrel to a peak of $83.95 at the start of this year. But while prices are now above the group's target of $75 a barrel, OPEC's Ecuadorian President Germanico Pinto said before the meeting there was still a long way to go before the group would feel “at ease” with the market due to fears of a double-dip recession. Speaking before the start of the meeting, Al-Naimi said global oil demand will grow by about one million bpd by the second half of this year. “Good demand, reliable supply, beautiful prices - we are very happy,” Al-Naimi said. He has previously said prices around $75 a barrel are necessary to encourage investment in future oil supplies to cope with booming demand from emerging economies, and are ultimately good for both producers and consumers. “The world is going to need a lot energy, all kinds of energy,” Al-Naimi said on Wednesday. But rising prices at the pumps have threatened to squeeze consumers still struggling in the aftermath of the worst recession for 70 years. Retail gasoline prices in the United States soared to their highest level in nearly 18 months last week and could soon top $3 a gallon, the US Department of Energy said on Monday. Unemployment in the world's largest energy consumer is almost 10 percent. Oil prices were boosted further by news that Russian oil major Rosneft faces a possible export deadlock after bankrupt rival Yukos won US and British court injunctions making cash payments to the state oil company in the West very complex, market sources said on Wednesday. Rosneft declined to comment on the injunctions, which trade and industry sources said were part of a legal battle between Yukos and the Russian government, which dissolved Yukos after putting increasing pressure on the company between 2003 and 2007. Most of the assets ultimately ended up with Rosneft. Rosneft pumps and exports more than a fifth of Russia's crude and its rapid growth has helped Moscow outpace Saudi Arabia as the world's largest producer. The US Federal Reserve's pledge on Tuesday to keep interest rates near zero for an extended period also supported prices. European shares hit a two-month high on Wednesday, while data also showed US producer prices fell by more than last month, boosting sentiment. Oil prices got further support from a sharp drop in gasoline stockpiles in the US. Gasoline inventories fell by 3.7 million barrels last week, according to data from the American Petroleum Institute Tuesday. US crude oil stockpiles rose much less than expected, posting gains of 403,000 barrels in the week to March 12.
