Oil rallies to settle up $1 a barrel

Wed Feb 1, 2017 3:04pm EST
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By Jessica Resnick-Ault

NEW YORK (Reuters) - Crude futures rallied late Wednesday, jumping more than $1 a barrel after briefly trading lower on a bearish U.S. government report early in the day.

Oil markets have been trapped in a range as traders wait to see whether OPEC production cuts can outweigh U.S. supply growth.

Oil futures pared gains immediately after weekly U.S. supply data showed a much bigger build than expected, but prices rebounded.

Brent crude LCOc1 settled up $1.22 a barrel at $56.80. U.S. crude CLc1 settled up $1.07 a barrel at $53.88.

"U.S. crude could be in consolidation from $51 to $55 for awhile, until there's more evidence on OPEC production cuts or more evidence of production picking up or stabilizing in the U.S.," said Bill Baruch, senior market strategist at iitrader.com.

U.S. crude stockpiles for the week ended Friday rose 6.47 million barrels, nearly double the expected increase. The larger-than expected build initially exacerbated concerns that efforts to cut production globally may not be sufficient to reduce a supply glut.

"It was a very bearish report on several fronts, from the large across-the-board builds in the major categories, and the continued decline in refinery runs," said John Kilduff, partner at energy hedge fund Again Capital LLC in New York. "Crude oil imports were elevated again, as well, with the Gulf Coast seeing a big increase in crude oil inventories."

Still, data in the report also suggested U.S. production could be lower in the week, Baruch said. That energized bulls to push crude upward, he said.   Continued...

A general view of a crude oil importing port in Qingdao, Shandong province, November 9, 2008. REUTERS/Stringer/File Photo