Crude oil rose for a second day on signs that OPEC is implementing a record production cut announced in December.

Prices are “firming up” because of output constraint by the Organization of Petroleum Exporting Countries, and further cuts may not be necessary, Libya’s top oil official, Shokri Ghanem, said in an interview. A government report later today will probably show U.S. crude stockpiles increased last week, according to a Bloomberg News survey.

“OPEC is still short of their goal but they are making impressive progress,” said Michael Fitzpatrick, vice president for energy at MF Global Ltd. in New York. “The cuts went into effect on Jan. 1 so we probably won’t see the whole impact for another month.”

Crude oil for March delivery rose 98 cents, or 2.4 percent, to $41.76 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Prices are down 6.4 percent this year and 54 percent from a year ago.

OPEC, supplier of more than 40 percent of the world’s oil, may not need to reduce output when it meets next month, Libya’s Ghanem said. The group decided on Dec. 17 to trim output by 9 percent beginning on Jan. 1.

The Energy Department is scheduled to release its weekly petroleum supply report at 10:30 a.m. today in Washington.

Crude-oil stockpiles increased by 3 million barrels in the week ended Jan. 30 from 338.9 million the week before, according to the median of 14 analyst estimates before the report. It would be the 17th gain in 19 weeks. All of the analysts surveyed said supplies rose.

API Report

The industry-funded American Petroleum Institute reported yesterday that crude oil inventories rose 8.13 million barrels to 346.2 million last week. The API moved release of its inventory data to Tuesday afternoons beginning last week. It had been issuing its reports on Wednesday mornings since 2003 to coincide with supply totals released by the government.

“Any rally this morning will be tempered by the fact that we might be getting a big inventory number,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago.

Brent crude oil for March settlement rose 49 cents, or 1.1 percent, to $44.57 a barrel on London’s ICE Futures Europe exchange.

Mark Shenk – Bloomberg

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