Crude Oil Surges Over 5% To End Above $48, Even As Supplies Soar

(RTTNews) - U.S. crude oil rallied towards the close to end over five percent higher on Wednesday, on bargain hunting with the dollar trending lower against some major currencies. The late surge comes even as the official weekly oil report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have jumped more than expected last week.

This is crude oil's largest one-day gain since June 2012.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have jumped 5.4 million barrels in the week ended January 9, while analysts expected a decline of 0.5 million barrels. The report showed U.S. crude oil inventories at 382.4 million barrels, end last week.

Gasoline stocks rose by 3.2 million barrels last week, while analysts anticipated an increase of 3.5 million barrels. Inventories of distillate, including heating fuel, increased 2.9 million barrels.

Yesterday, the American Petroleum Institute said U.S. crude inventories rose 3.9 million barrels for the week ended January 9.

Speculations continued that the OPEC either cannot or will not tame the dramatic recent plunge in oil prices by cutting supplies. World oil prices have been falling since June from a 2014 high above $100 a barrel. One OPEC official blamed U.S. shale oil earlier this week for the spiraling prices.

"We cannot continue to be protecting a certain price," UAE energy minister Suhail al-Mazrouei said. "We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected," he said at Gulf Intelligence UAE Energy Forum in Abu Dhabi.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, soared $2.59 or 5.6 percent to close at $48.48 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for February delivery scaled a high of $48.48 a barrel intraday and a low of $45.01.

On Tuesday, ended lower by $0.18 or 0.3 percent, ahead of the official weekly oil report from the U.S. Energy Information Administration and after a top Middle East oil producer said it will not curb production anytime soon.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 92.08 on Wednesday, down from its previous close of 92.22 late Tuesday in North American trade. The dollar scaled a high of 92.42 intraday and a low of 91.61.

The euro trended lower higher the dollar at $1.1784 on Wednesday, as compared to its previous close of $1.1772 late Tuesday in North American trade. The euro scaled a high of $1.1847 intraday and a low of $1.1730.

On the economic front, U.S. retail sales declined more than expected, with sales down 0.9 percent in December after climbing by a downwardly revised 0.4 percent in November. Economists expected sales to edge down by 0.1 percent.

A separate report from the Labor Department showed that falling fuel prices contributed to another substantial decrease in U.S. import prices in December, with import price index plummeting 2.5 percent after tumbling by a revised 1.8 percent in November. Economists expected import prices to slump by 2.7 percent.

Additionally, the report said export prices fell 1.2 percent in December following a 0.8 percent drop in the previous month. Export prices had been expected to fall by 0.5 percent.

Meanwhile, U.S. business inventories rose slightly less than expected in November, with an increase in wholesale inventories partly offset by a drop in retail inventories, the Commerce Department said. The report showed business inventories up by 0.2 percent in November, matching the modest increase seen in October. Economists expected inventories to rise by about 0.3 percent.

From Europe, the leading economic index for the UK, which measures the future economic activity, dropped for the third straight month in November, data from the Conference Board showed Wednesday. The Conference Board's leading economic index fell 0.3 percent in November, same as in both September and October. In the May to November period, the leading index improved 0.3 percent, down from 2.2 percent growth in the previous six-month period.

The World Bank downgraded its global economic forecast citing weak prospects for the euro area and Japan, despite an uptick in developing countries and strong momentum in the United States, In its biannual report 'Global Economic Prospects' released on Tuesday, the World Bank said global gross domestic product is expected to grow 3 percent in 2015, slower than the 3.4 percent estimated in June. For 2016, the economy is projected to expand 3.3 percent instead of 3.5 percent. The bank predicted 3.2 percent growth for 2017.