Investing.com -- U.S. Crude futures surged by 4%, erasing all of their losses from the previous day's sell-off, following the release of a bullish U.S. supply report on Wednesday morning.
On the New York Mercantile Exchange, WTI crude for April delivery traded in a broad range between $36.25 and $38.44 a barrel, before settling at $38.23, up 1.69 or 4.63% on the session. At session-highs, U.S. crude futures came cents away from eclipsing their 2016-yearly high reached on the first trading day of the year. WTI crude has now closed higher in three of the last four sessions and seven of the last 10. After tumbling to 13-year lows at $26.05 a barrel on February 11, Texas, light sweet futures have soared by more than 32%.
On the Intercontinental Exchange (ICE), brent crude for May delivery wavered between $39.41 and $41.16 a barrel, before closing at 41.01, up 1.36 or 3.43% on the day. North Sea brent futures closed higher for the eighth time in 10 sessions, remaining near their highest level on the calendar year. Since briefly falling below $30 a barrel in mid-February, have also jumped by more than 25%.
Crude extended gains on Wednesday morning after the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that commercial crude inventories rose by 3.9 million barrels for the week ending on March 4. At 521.9 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. The modest supply build was expected by analysts, one week after U.S. crude stockpiles skyrocketed by more than 10 million barrels.
More importantly, motor gasoline inventories fell by 4.5 million barrels in line with seasonal patterns. The draw in gasoline inventories provides a harbinger of further declines in the coming weeks, as refiners continue to convert crude oil into a variety of products in preparation for the summer driving season.
Meanwhile, U.S. crude production ticked up by 1,000 barrels per day to 9.078 million bpd, halting a skid of six consecutive weekly declines. Crude prices have tumbled more than 50% since OPEC rattled global markets in November, 2014, with a strategic decision to maintain its production ceiling above 30 million barrels per day. The tactic triggered a prolonged battle with U.S. shale producers for market share, flooding global energy markets with excessive supply.
Investors also reacted to a report from Reuters that Saudi Arabia is looking to secure loans between $6 and $8 billion in an attempt to stave off a budget deficit that reached as high as $100 billion last year. The report fueled speculation that Saudi Arabia could consider further concessions with OPEC and Non-OPEC producers in an effort to boost oil prices above $50 a barrel. Last week, Reuters reported that the kingdom actively sought loans totaling up to $10 billion from a host of top multinational banks, as the Gulf nation considers a proposal which would require it to freeze production at levels reached in January.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell to an intraday low of 96.95 on a volatile day of trading. The index, which is down more than 1% over the last two months, remained near two-week lows on Wednesday.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.