Oil Near $100 After Sharp Overnight Fall

Oil prices gained Wednesday after dropping sharply in the previous session on the possibility that OPEC will raise output and on expectations that U.S. crude supplies are continuing to rise.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said the cartel is shying away from boosting production due to expectations that global demand for crude will fall during the second quarter.

Khelil's comment helped to halt the slide driven by investors still betting the cartel will boost production to bring prices down.

OPEC ministers, in these investors' eyes, are worried that soaring oil prices will help push the U.S. into a recession that would further cut demand for crude. The group meets later Wednesday to decide its policy for the next few months.

Light, sweet crude for April delivery rose 30 cents to $99.82 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract fell $2.93 to settle at $99.52 a barrel on Tuesday. It was crude's first move below $100 this week and its lowest settlement price since Feb. 25.

Prices were also pressured by expectations that U.S. crude inventories rose 2.3 million barrels last week, according to analysts surveyed by Dow Jones Newswires. The Energy Department's Energy Information Administration will issue its weekly inventory report on Wednesday.

EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to $57 a barrel by 2016 as exploration and development expands and brings new supplies to the market.

Prices rose as high as $103.95 a barrel Monday, climbing past the $103.76 price many analysts consider to be the true record high for oil after the $38 per barrel price from 1980 is adjusted for inflation.

Analysts attribute much of the recent run-up in oil prices to speculative investors driven to the market by a weak dollar. Crude futures offer a hedge against it, and oil futures bought and sold in the greenback are more attractive to foreign investors when it is falling. This view of oil futures as a safe haven during turbulent times has recently rendered reports on inventories and demand moot.

Heating oil futures added 0.3 cent to $2.7948 a gallon while gasoline prices rose 0.23 cent to $2.5314 a gallon.

Natural gas futures gained 2.8 cents to $9.381 per 1,000 cubic feet.

In London, Brent crude futures advanced 35 cents to $97.87 a barrel on the ICE Futures exchange.