Crude oil rebounded to above 54 U. S. dollars a barrel Wednesday as a rate cut by China and speculation of a production cut by Russia outweighed the larger- than-expected buildup in U.S. crude supplies.
Light, sweet crude for January delivery rallied 3.67 dollars to settle at 54.44 dollars a barrel after a volatile trading session on the New York Mercantile Exchange (NYMEX). Prices rose to as high as 54.84 dollars a barrel and fell to as low as 50.15 dollars a barrel.
The oil gained a strong support as China's biggest interest rate cut in 11 years brightened up investors' outlook for future energy demand. It is the fourth time in three months for the world's second-largest energy consumption country to cut the interest rate.
Also pushing up oil prices Wednesday was the news that one of the world's biggest crude exporters Russia might join OPEC in output cut. The President of OPEC Chakib Khelil told press on Wednesday that the cartel would consider production cuts in the unofficial meeting in Cairo this week, according to Bloomberg report.
NYMEX futures initially withdrew after the U.S. Energy Department reported a jump of 7.3 million barrels in the crude inventory during the week ended Friday, which is far more than the market had predicted. U.S. gasoline demand over the four weeks ended Friday averaged about 9 millions barrels a day, which was 2.8 percent down from one year earlier.
Prices were also affected by a series of mixed economic readings. The number of initial requests for unemployment benefits fell to 529,000, after seasonal adjustment, but it still remain at recession levels. Meanwhile, both orders to U.S. factories for big-ticket manufactured goods and consumer spending plunged more than the market had expected in October.
In London, Brent crude for January delivery rose 3.57 dollars to settle at 53.92 dollars a barrel.