MW: Crude rallies ahead of Fed decision, inventory data
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures surged more than 6% Wednesday, gaining the most in nearly five months, as rallies in global stock markets and a possible rate cut by the Federal Reserve boosted investors' confidence.
Traders were also awaiting U.S. petroleum-inventories data due at 10.30 am Eastern.
Crude's gain came amid broad gains in commodities. Gold futures surged more than 3%, and silver jumped more than 10%. Copper, a metal seen as an economic barometer, surged 7%, rebounding for a third day after hitting a three-year low.
The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, rose by 1.5%.
Crude for December delivery gained $4.08 to $66.81 a barrel on the New York Mercantile Exchange, surging 6.5%, its biggest daily percentage gain since June 6.
Crude rose as "stock market sentiment was lifted on hopes of interest rate cuts in the U.S.," wrote Michael Davies, an energy analyst at Sucden Research.
Europe, the U.K. and Japan could also cut rates in the following weeks, he added. "A significant cut by all of these countries could certainly boost sentiment and oil prices," he said.
Following a sharp rise in U.S. stocks Tuesday, stock markets rallied in Asia and Europe Wednesday. In currencies, the U.S. dollar moved lower against the euro, helping push up dollar-denominated crude prices.
The Fed is expected to cut its key interest rate by a half percentage point. The decision is due at 2:15 p.m. Eastern Time.
Separately, the U.S. Energy Information Administration will offer its weekly update on last week's U.S. petroleum supplies later in the morning.
Industry experts surveyed by energy information provider Platts, on average, expect a rise of 1.5 million barrels for crude, a climb of 1 million for distillates and an increase of 900,000 barrels for gasoline stocks.
Crude had lost $5, or 7.4%, in the past three sessions on worries that slower economic growth will reduce energy demand. It ended Tuesday's trading at its lowest level in 17 months.
Rounding out energy trading Wednesday, November reformulated gasoline rose 5.7% to $1.539 per gallon, while November heating oil rallied 5.3% to $2.0125 per gallon.
November natural-gas futures gained 3.2% to $6.382 per million British thermal units.
At the pump on Wednesday, the average price for a gallon of regular gasoline stood at $2.589, down from Tuesday's $2.629 and below the year-ago level of $2.875, according to AAA's Daily Fuel Gauge Report.
