Oil plunges after record stockpile data, dollar gains

Wed Mar 8, 2017 4:58pm EST
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By Herbert Lash

NEW YORK (Reuters) - Crude prices plunged more than 5 percent on Wednesday on a spike in U.S. oil stockpiles, while the dollar gained on increased expectations the Federal Reserve will raise U.S. interest rates next week after a robust report on private sector jobs.

The surge in crude inventories to a record high slammed energy stocks, leading much of Wall Street lower, and stoked concerns a global oil glut may persist even as the Organization of the Petroleum Exporting Countries tries to prop up prices with output curbs.

U.S. energy stocks .SPNY slumped 2.5 percent in their biggest decline since mid-September.

More crude selling could be triggered if oil prices break below support levels after trading in a tight range this year, analysts said. Rising production also is hurting prices.

"The other thing unnerving the market is rapid growth in U.S. crude production," said Andrew Lebow, a senior partner at Commodity Research Group in Darien, Connecticut.

The U.S. Energy Information Administration reported crude stocks rose by 8.21 million barrels, above a forecast 1.9 million. [API/S]

Brent crude LCOc1, the international benchmark, settled down $2.81 at $53.11 a barrel. U.S. crude CLc1 fell $2.86 to settle at $50.28.

The dollar gained after U.S. hiring in the private sector surged in February, underscoring the economy's strength and adding to expectations the Fed will raise rates when policy-setters meet on March 15.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 8, 2017. REUTERS/Brendan McDermid