Oil settles up 5 percent, trims gains after hours on API report
By Barani Krishnan
NEW YORK (Reuters) - Oil prices surged 5 percent on Tuesday, the biggest daily gain since April, as investors' covering of short positions and a technical rebound helped lift the market from two-month lows.
However, crude futures pared gains in post-settlement trade after industry group American Petroleum Institute (API) reported a surprise build of 2.2 million barrels in U.S. crude stockpiles last week.
During the regular trading session, a rally in global equity markets to record highs added to the upbeat sentiment in oil. The dollar fell, making greenback-denominated oil more attractive to holders of the euro and other currencies. [MKTS/GLOB] [.N] [USD/]
API also reported larger-than-expected gains in inventories of gasoline and distillates, which include diesel. A Reuters poll had forecast a crude drawdown of 3 million barrels last week, translating to an eighth straight week of declines. Official inventory data is due from the U.S. Energy Information Administration (EIA) on Wednesday. [EIA/S]
"It's another major curveball from the API in terms of expectations," said John Kildulff, partner at New York energy hedge fund Again Capital, referring to huge variances at times between the trade group's numbers and the government's.
"We'll just have to hunker down and wait for the EIA report."
U.S. crude's West Texas Intermediate (WTI) futures settled up $2.04, or 4.6 percent, at $46.80 a barrel. Brent crude futures settled up $2.22, or 4.8 percent, at $48.47.
After the API report, both benchmarks trimmed gains to less than $2 a barrel. Continued...