US oil soars 4.9 pct, closes at $38.29 a barrel
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U.S. oil prices jumped nearly 5 percent on Wednesday after a huge draw in U.S. gasoline inventories last week convinced the market that energy demand was improving despite U.S. crude stockpiles hitting record highs for a fourth week.
Crude prices also gained support on speculation that top oil producers might agree soon to an output freeze.
U.S. crude futures settled $1.79 higher, or 4.9 percent, at $38.29 a barrel. Brent crude futures rose $1.29 to $40.94 a barrel, having touched three-month highs on Tuesday above $41.
The U.S. Energy Information Administration said crude stockpiles rose 3.9 million barrels to nearly 522 million barrels, as predicted by analysts in a Reuters poll.
But gasoline inventories fell 4.5 million barrels, much more than the polled number of 1.4 million barrels.
"Gasoline is the star of the show today. Ongoing strength in demand has yielded a large draw to gasoline inventories despite a rebound in refinery runs," said Matt Smith, director of commodity research at New York-headquarter energy data provider ClipperData.
The West Phoenix oil platform, operated by Seadrill Norge AS, center, stands in the Port of Cromarty Firth in Cromarty, U.K.
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U.S. gasoline futures hit November highs, rallying 5 percent.
Earlier in the session, oil rallied after an Iraqi oil official told a state newspaper that producers in and outside the Organization of the Petroleum Exporting Countries plan to meet in Moscow on March 20 to discuss an output freeze. But Russia's energy ministry said no date or place had been set for the meeting.
Worries about too much oil supply caused global benchmark Brent to fall 3 percent on Tuesday, snapping a six-day rally after hitting 2016 highs above $40. But buying in crude returned on Wednesday as talk of OPEC action gathered momentum.
"It's going to be volatile for sure," Scott Shelton, energy broker at ICAP in Durham, North Carolina, describing potential market action for the day.
Oil prices have risen by around 25 percent since Saudi Arabia, Qatar, Venezuela and non-OPEC exporter Russia said in mid-February they would leave supply at January's levels if there was enough support from other producers.