U.S Oil Plummets on Rising Crude Stocks

Oil prices rose 8 per cent higher on Wednesday,February 3, after investors took advantage of a weaker US dollar and ignored data showing an unexpected large surge in US crude inventories to record highs.

Comments by Russia’s foreign minister reiterating the major producer’s willingness to meet if there was consensus among the OPEC and non-OPEC members also reignited hopes of a deal to trim output and helped to boost prices.

Reuters reports that the dollar index tumbled to an over seven-week low, making commodities priced in the greenback cheaper for holders of other currencies, amid growing scepticism that the Federal Reserve would be able to hike US interest rates again this year and after data showed the US services industry grew more slowly than expected last month.

US crude closed with one its biggest gains in five months, rising $2.40, or 8 per cent, to $32.28. Brent futures settled up $2.32, or 7.1 per cent, at $35.04 a barrel, after rising as high as $35.11.

“US heating oil futures finished 6.7 per cent firmer after the US weather model called for seasonal cold over the next two weeks.

Senior vice president of energy futures at Mizuho Securities USA,Robert Yawger, said: “We’re getting the rally in crude oil from the pounding that the dollar is taking.”


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