NEW YORK (Reuters) - U.S. crude oil prices rose more than 6 percent on Wednesday as the government reported an inventory build that reversed bearish market expectations, putting the market on a volatile course after three straight days of losses.
The spike of more than $3 a barrel stalled oil bears’ expectations for a longer and deeper price rout after two-month lows hit on Tuesday on worries about high supplies and weak demand.
Oil rallied from early in the session, rising more than $1 on what was described as a big algorithmic trade.
The U.S. Energy Information Administration (EIA) added to the rally when it reported a 3.4 million-barrels crude build in line with some traders expectations, but below the 4.1 million-barrel hike cited on Tuesday by industry group the American Petroleum Institute. [EIA/S] [API/S]
Crude stockpiles, however, fell 785,000 barrels at the Cushing, Oklahoma, delivery hub for U.S. crude futures.
“The market was looking for more bearish information and got a neutral report,” Scott Shelton, energy broker and commodities specialist with ICAP in Durham, North Carolina.
Oil pared gains briefly in afternoon trade as the dollar .DXY surged on bets the Federal Reserve was still open to raising U.S. interest rates in December.
U.S. crude CLc1 settled up $2.74 at $45.94 a barrel, hitting a session high at $46.01. In post-settlement, it reached a peak of $46.22 with brokers citing the likelihood of more short covering in a thinly-traded market.
Brent LCOc1, the global benchmark for oil, closed up $2.24 at $49.05.
U.S. crude’s rise of 6 percent was the largest in two months. Brent’s 5 percent advance was the biggest in three weeks.
The EIA also said that stockpiles of gasoline and distillates, which include diesel, fell more than expected. U.S. gasoline RBc1 and ultra-low sulfur diesel HOc1 futures gained more than 4 percent ahead of their contract expirations on Friday.
Additional reporting by Amanda Cooper in London and Aaron Sheldrick in Tokyo; editing by Jason Neely and Marguerita Choy