NEW YORK (Reuters) - Oil jumped as much as 3 percent on Tuesday as a weak dollar propped up commodities, but crude prices came off their highs in post-settlement trading on signs of another big U.S. supply build last week.
Oil prices were up most of the day, tracking the dollar, despite concerns about rising U.S. inventories. While some traders expressed surprise with the market’s behaviour, others shrugged it off as they did not think oil was on the cusp of an extended recovery because of nagging worries about the global oversupply in crude.
The American Petroleum Institute (API), an industry group, said after the market’s close that U.S. oil stockpiles surged by nearly 13 million barrels last week.
A Reuters poll showed U.S. crude stockpiles rose by 4.1 million barrels, on average, in the week to Jan. 23. That would add to the previous week’s build of over 10 million barrels, the biggest in 14 years, which had already brought inventories to the highest level on record for this time of year.
Genscape, which tracks oil inventories, reported a near 2.4 million-barrel build last week in Cushing, the Oklahoma delivery point for U.S. crude futures, a market source said.
Official data on last week’s inventories will be reported by the U.S. Energy Information Administration on Wednesday.
“Given the expectations in supply, it’s kind of surprising to see the market pop this much today,” said Andrew Lipow, president at Lipow Oil Associates in Texas.
“There’s probably some short-covering after the extended selloff we’ve had for weeks now, but I don’t think fundamentally anything’s changed.”
The dollar retreated from an 11-year high in the previous session, falling about 1 percent to the euro after weaker-than-expected orders for U.S. durable goods in December.
Benchmark Brent crude LCOc1 settled up $1.44, or 3 percent, at $49.60 a barrel after rallying to just a penny short of $50. The last time Brent was at $50 was on Jan. 22.
U.S. crude futures CLc1 finished up $1.08, or 2.4 percent, at $46.23 a barrel, after a session peak at $46.55.
The API data, released two hours after the close in U.S. crude, pared the trading gains. Brent was at $49.25 a barrel by 5:00 p.m. ET (2200 GMT), while U.S. crude traded below $45.80.
Trading volumes in U.S. oil futures were about half their usual levels, with many traders in New York working away from their desks after a blizzard swept across the northeastern United States. Thomson Reuters data showed less than 300,000 lots traded for the front-month contract in U.S. crude.
Oil prices have slumped nearly 60 percent since peaking in June, driven lower by ample supplies from the U.S. shale oil boom and the Organization of the Petroleum Exporting Countries’ decision not to cut output.
OPEC Secretary-General Abdullah al-Badri said on Monday prices might have bottomed after the seven-month selloff, and warned of a possible spike to $200 a barrel.
Investment banks, however, remain bearish on oil. Swiss bank UBS lowered its 2015 forecasts for Brent to $52.50 a barrel and WTI to $49 a barrel.
Goldman Sachs’ chief commodity analyst said in a research note that demand growth in China and other emerging economies was set to slow.
Additional reporting by Himanshu Ojha in London and Florence Tan and Henning Gloystein in Singapore; Editing by Michael Urquhart, Meredith Mazzilli, Marguerita Choy and Andre Grenon