MW: Crude rallies ahead of Fed decision, inventory data
By Moming Zhou & Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude-oil futures surged as much as 6.8% Wednesday, set to post the largest gain 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 rises 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. See Metals Stocks.
The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, rose 3%.
Crude for December delivery gained $3.97 to $66.70 a barrel on the New York Mercantile Exchange, surging 6.3%.
In electronic trading on Globex, it climbed as high as $66.97, which translates to a percentage gain of 6.8%. That would be the largest 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, in a research note.
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. See Asia Markets. In currencies, the U.S. dollar moved lower against the euro, helping push up dollar-denominated crude prices. See Currencies Report.
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. See related story.
Separately, the U.S. Energy Information Administration will offer its weekly update on last week's U.S. petroleum supplies at 10:35 a.m. Eastern.
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 4.3% to $1.5177 per gallon, while November heating oil rallied 4.3% to $1.9943 per gallon.
November natural-gas futures gained 3.1% to $6.38 per million British thermal units.
The November contract will expire at the close of trading on Nymex Wednesday. December natural gas, which will become the front-month contract, was at $6.687, up 4.2%, on Globex.
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.
