Oil surges on hopes for output cuts to trim glut
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices surged on Tuesday, settling more than 4 percent higher as investors found reasons to hope for output cuts that could eventually reduce one of the biggest global supply gluts in decades.
Crude jumped after OPEC renewed calls for rival producers to cut supply alongside its members. More buying emerged after U.S.-based global oil producer Hess Corp said it planned to cut capital spending by 40 percent this year. After settlement, other U.S. producers announced spending cuts.
Brent crude settled up $1.30, or 4.26 percent, at $31.80 a barrel, rebounding from a decline at the start of the session to top out at $32.72.
U.S. crude rose 3.7 percent, or $1.11, to settle at $31.45 a barrel. During the session it rose as high as $32.41.
The contract briefly turned negative in post-settlement trade after data from the American Petroleum Institute, an industry group, showed a larger-than-expected inventory build in U.S. crude stocks in the week to Jan. 22.
Still, Crude stocks at the Cushing, Oklahoma, delivery hub fell by 664,000 barrels, API said.
Some analysts had expected a fall in the inventory at the delivery hub as Canadian oil sands producers start to cut output.
U.S. government data on U.S. crude oil stocks is due on Wednesday. Continued...