Oil jumps on outages; API reports big U.S. crude build

Tue May 10, 2016 5:57pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Brent jumped 4 percent on Tuesday while U.S. crude settled up more than 2 percent, after a late burst of buying driven in part by expectations that record U.S. crude inventories would not swell by as much as they have in recent weeks.

Crude supply outages in Canada, Nigeria and elsewhere also boosted prices. Brent's gain was its biggest one-day percentage move in a month.

The market pared gains briefly in post-settlement trade after the American Petroleum Institute (API), an industry group, said U.S. crude inventories rose by 3.45 million barrels to record highs of 543.1 million during the week ended May 6.

Analysts polled by Reuters had expected a build of only 714,000-barrels. [EIA/S]

Traders and investors will be looking out for official inventory data on Wednesday from the U.S. Energy Information Administration (EIA).

"We should roll back a good part of today's gains if the EIA confirms the builds cited by API or comes up with even larger numbers," said Tariq Zahir, crude trader and managing partner at Tyche Capital Advisors in New York.

Brent LCOc1 settled up $1.89, or 4.3 percent, at $45.52 per barrel. More than 6,000 contracts changed hands in the final minute, Reuters data showed. The global oil benchmark rose to as high as $45.70 in post-settlement trading. After settlement, it briefly dipped more than 30 cents on the API data, then recovered to near its settlement price.

U.S. crude's West Texas Intermediate (WTI) futures CLc1 rose 1.22, or 2.8 percent, to settle at $44.66. WTI also fell briefly on the API data.   Continued...

Pumpjacks and other infrastructure for producing oil dot fields outside of Watford City, North Dakota January 21, 2016. REUTERS/Andrew Cullen