Oil jumps 8 percent as dollar tumbles after U.S. data

Wed Feb 3, 2016 3:30pm EST
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By Devika Krishna Kumar

NEW YORK (Reuters) - Oil prices jumped 8 percent higher on Wednesday, snapping a two-day rout, after investors took advantage of a weaker U.S. dollar and shrugged off data showing an unexpected large surge in U.S. crude inventories to record highs.

Comments by Russia's foreign minister reiterating the major producer's willingness to meet if there was consensus among the OPEC and non-OPEC members, also reignited hopes of a deal to trim output and helped to boost prices.

The dollar index .DXY tumbled to an over seven-week low, making commodities priced in the greenback cheaper for holders of other currencies, amid growing skepticism that the Federal Reserve would be able to hike U.S. interest rates again this year and after data showed the U.S. services industry grew more slowly than expected last month.

U.S. crude CLc1 closed with one its biggest gains in five months, rising $2.40, or 8 percent, to $32.28.

Brent futures LCOc1 settled up $2.32, or 7.1 percent, at $35.04 a barrel, after rising as high as $35.11.

U.S. heating oil futures HOc1 finished 6.7 percent firmer after the U.S. weather model called for seasonal cold over the next two weeks.

"We're getting the rally in crude oil from the pounding that the dollar is taking," said Robert Yawger, senior vice president of energy futures at Mizuho Securities USA.

"There is a little bit of spec activity involved in that too. The market has a tendency as of late here to draw in spec position when we trade below $30," he added.   Continued...

A worker grabs a nozzle at a petrol station in Tehran, Iran January 25, 2016. REUTERS/Raheb Homavandi/TIMA