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By Samuel R. Avro on Nov 26, 2008 with no responses

Crude Surges on China Rate Cut, European Stimulus

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Crude-oil futures rallied Wednesday as speculation that a big interest-rate cut in China will increase demand outweighed data that show sharp increase in U.S. crude inventories last week.

Crude for January delivery rose $3.67, or 7.2%, to end at $54.44 a barrel on the New York Mercantile Exchange.

London Brent crude rose $1.72 cents to $52.07 on the ICE Futures exchange.

Oil opened the week with a 9 percent swing upward Monday after the U.S. said it would bail out Citigroup, followed by a nearly 7 percent decline the following day on a raft of ominous economic data.

Crude initially gave back early gains Wednesday after a new government inventory report showed far more crude and gasoline in storage than was expected.

For the week ended Nov. 21 crude inventories jumped by 7.3 million barrels, the Energy Department’s Energy Information Administration said in its weekly report.

Analysts had expected a boost of only 400,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill.

Gasoline inventories rose by 1.9 million barrels. Analysts expected stockpiles to rise by only 300,000 barrels. Demand for gasoline over the four weeks ended Nov. 21 was 2.8 percent lower than a year earlier, averaging about 9 million barrels a day.

Courtesy: MarketWatch, CNBC