NEW YORK: Brent jumped 4 percent on Tuesday while US crude settled up more than 2 percent, after a late burst of buying driven in part by expectations that record US 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.
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.
Refined oil products joined the rally, with gasoline RBc1 closing up 3 percent and ultralow sulphur diesel HOc1, or heating oil, 4 percent.
Oil prices were up most of the day on worries about supply outages.
Wildfires in Canada have shut in more than 1 million barrels per day of production from Alberta’s oil sands region. Royal Dutch Shell Plc was the first to resume production in the area on Tuesday while others looked to restart after more than a week of halted operations.
In Nigeria, attacks on oil infrastructure have pushed crude output close to a 22-year low in Africa’s largest oil producer, Reuters data showed.
This year’s rebound in oil has been one of the strongest since the financial crisis. Prices have rallied nearly 80 percent from multiyear lows under $30 in the first quarter, supported by falling U.S. production, supply constraints in Libya and the Americas and a weak dollar.
Since the end of April, the rally has stalled at around $45.
Courtesy : TheNews