Traders work on the floor of the New York Stock Exchange (NYSE) at the end of the trading day in New York, New York, USA, 14 January 2015. The Dow Jones Industrials were down 349 points during the trading day, but ended the day down 189 after the price of oil surged by 2 US dollars
NEW YORK: Oil futures spiked in late trade yesterday, marking the strongest daily gain in more than two years on short covering ahead of options expiration.
Both US and Brent crude oil shook off a US government report which showed that US crude oil stockpiles rose far more than expected last week due to rocketing domestic production, as traders instead focused on technical trades.
Brent crude rose $2.10 to settle at $46.38 a barrel. The benchmark hit a low of $45.19 on Tuesday, the lowest since March 2009, amid increasing U.S. stocks and a continuing global supply glut. US crude oil settled at $48.48 up $2.59.
US government data showed crude stocks rose 5.4 million barrels, more than 10 times what analysts had expected. Inventories at the Cushing, Oklahoma, delivery hub for the US futures contract, rose 1.8 million barrels.
But the big builds in inventories may have been offset by figures showing an increase in demand, said Andrew Lipow, president of Lipow Oil Associates.
In late afternoon deals in London, Brent North Sea crude for February delivery lost 53 cents to $46.06 per barrel. US benchmark West Texas Intermediate for delivery in February dropped just three cents at $45.85 a barrel.
The US Department of Energy revealed that commercial crude stocks surged 5.4 million barrels in the week to January 9.
That was far bigger than market expectations for a gain of 1.75 million barrels, according to analysts polled by Bloomberg News.
Rising inventories signal weak demand in the United States, which is the world’s top crude consumer. Gasoline or petrol reserves meanwhile rose 3.2 million barrels, easily outstripping predictions for a gain of 1.3 million.
“Crude inventories and gasoline inventories are strong while refinery demand dropped, which could signal the beginning of the seasonal slowdown during maintenance,” noted Saxo Bank analyst Ole Hansen. Oil sentiment also soured Wednesday after the World Bank slashed its global 2015 economic growth forecast to 3.0 percent from 3.4 percent, raising fresh doubts about future crude demand.
Agencies
