Crude prices jumped in reaction to the latest weekly U.S. crude stockpiles data but then quickly went into reverse gear, before bounce back once again. Traders were in no mood to take any chances ahead of the conclusion of talks between the OPEC and non-OPEC members in Algeria, especially given how headline-driven prices have become. At the time of this writing, Brent was trading at $46.65 per barrel and WTI at $45.20 a barrel, both holding onto small gains for the day.

The official government data more or less confirmed the surprise drawdown in U.S. crude inventories as had been reported by the American Petroleum Institute (API) on Tuesday evening. According to the Energy Information Administration (EIA), crude inventories fell by a good 1.9 million barrels in the week to Sept. 23. Oil inventories were therefore down the fourth consecutive week, contrary to analyst expectations who on average had envisaged a build of 2.4 million barrels. The API had reported a slightly smaller draw of 800,000 barrels on Tuesday. So, the headline figure was a positive surprise.

However contrary to the API data, the EIA reported that crude oil stocks at Cushing, Okla., a key delivery hub for WTI crude, increased by 600,000 barrels rather than decrease by 800,000 barrels. What’s more, gasoline stocks fell by only 770,000 barrels rather than 3.7 million. So, relative to the API data, the EIA’s report was not as bullish as the headline inventory number suggested which may also help explain why oil was unable to hold on to its initial gains.

With regards to the meeting of oil producers in Algeria, the general feeling is that an agreement to cut or freeze oil production is looking increasingly unlikely as the International Energy Forum draws to a close. However it is surprising to see oil prices remain fairly stable at the moment, which suggests that the market is warming to the idea that a deal could potentially be signed in the OPEC’s November meeting as long as there is a general agreement in place today about a production cut/freeze.