Oil rises on outages; API reports big US crude build
The market pared gains briefly in post-settlement trade after the American Petroleum Institute (API), an industry group, said the US crude inventories rose by 3.45 million barrels to record highs of 543.1 million during the week ended May 6.
Brent crude jumped 4% on Tuesday while the US crude settled up more than 2%, 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 the US 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 US 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 settled up $1.89, or 4.3%, 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.
The US crude's West Texas Intermediate (WTI) futures rose 1.22, or 2.8%, to settle at $44.66. WTI also fell briefly on the API data.
Refined oil products joined the rally, with gasoline closing up 3% and ultralow sulphur diesel, or heating oil, 4%. 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% from multiyear lows under $30 in the first quarter, supported by falling US production, supply constraints in Libya and the Americas and a weak dollar.
Since the end of April, the rally has stalled at around $45.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
09:14 AM IST