Oil futures ended sharply higher Wednesday, boosted by a smaller-than-expected weekly climb in U.S. crude stockpiles.
Plans for a meeting of major oil producers next month to discuss limiting output and a complaisant Federal Reserve statement added to gains for crude futures.
April West Texas Intermediate crude rose $2.12, or 5.8%, to end at $38.46 a barrel on the New York Mercantile Exchange.
May Brent crude climbed by $1.59, or 4.1%, to finish at $40.33 a barrel on London’s ICE Futures exchange.
The Federal Reserve projected it would deliver just two rate increases in 2016 versus an earlier forecast for four hikes. The surprisingly accommodating tone sank the U.S. dollar, lifting oil and other commodities priced in the currency. A weaker legal tender can make assets priced in dollars more attractive to buyers using other currencies.
Earlier Wednesday, the U.S. Energy Information Administration reported a 1.3 million barrel rise in crude oil supplies for the week ended March 11. That marked a fifth weekly climb in a row, but it was less than the 1.5 million barrel increase reported by the American Petroleum Institute, and below the rise of 2.7 million barrels expected by analysts.
Hefty declines in gasoline inventories in recent weeks, along with strong demand for the fuel, had helped to boost the demand prospects for crude oil, which is used to make gasoline.
EIA data also showed a weekly fall in total U.S. production of 10,000 barrels a day to 9.068 million barrels a day. Output had peaked at 9.7 million last April.
At the Cushing, Okla. storage hub, stocks climbed to about 67.5 million barrels, nearing its working capacity of about 73 million.
“If producers have to pay for special storage costs and special transport charges, that could knock down the commodity price,” said Richard Hastings, macro strategist at Seaport Global Securities. “The outcome is uncertain at this time,” he stated.
Rounding out energy action, April natural gas added 1.7 cents, or 0.9%, to end at $1.868 per million British thermal units.
