MW: Oil futures surge 6%, as global stocks post gains
Government data on U.S. petroleum supplies due at 10:30 a.m. Eastern
NEW YORK (MarketWatch) -- Oil futures surged 6% on Wednesday, buoyed by gains on global stock markets and hopes that China will drag the global economy out of recession.
Crude oil for April delivery gained $2.42, or 5.7%, to $44.04 a barrel in electronic trading on Globex.
"Oil prices are rising for a second day as equities in Europe and Asia advance on reports of a new Chinese stimulus package," said analysts at Action Economics.
Oil prices rose 3.7% Tuesday after tumbling more than 10% in the previous session.
On Wall Street, U.S. stock futures rose Wednesday, with hopes that China could lead a worldwide economic rebound helping markets bounce off multi-year lows.
The Chinese Purchasing Managers' Index, used as gauge for of the health of the manufacturing sector, rose to 49.0 for February, up from 45.3 in January, data released Wednesday showed. The index had plunged to a record low of 38.8 in November.
The Shanghai Composite rallied 6.1%, boosted by the data as well as by hopes for further stimulus measures. The National People's Congress in China starts Thursday.
However, there was more grim economic data from other parts of the world.
In the United States, private-sector firms cut 697,000 jobs in February, according to the ADP employment index.
In Australia, the economy contracted for the first time in eight years during the October through December period. Gross domestic product shrank 0.5% in the fourth quarter compared with the third, according to data released Wednesday. Read more.
Also on Globex Wednesday, April reformulated gasoline rose 3 cents to $1.35 a gallon and April heating oil gained 3 cents to $1.21 a gallon. April natural gas futures fell 3 cents to $4.25 per million British thermal units.
Supply data ahead
The U.S. Energy Information Administration will release its closely watched data on petroleum inventories at 10:30 a.m. Eastern on Wednesday.
Analysts expect a 2.2 million-barrel buildup in commercial supplies of crude oil, a Platts survey issued Monday showed.
They also project a weekly decline of 600,000 barrels in gasoline inventories as well as a drop of 1.5 million barrels in distillate stocks, according to the survey. Refinery utilization is pegged at 81.4%, unchanged from the prior week.
Late Tuesday, the American Petroleum Institute reported that crude supplies fell by 463,000 barrels in the week ended Feb. 27. The API also said that gasoline supplies dropped by 642,000 barrels, while distillate stocks rose by 1.64 million barrels.
The Washington-based API, a trade association of the oil and natural gas industry, calculates inventories based on criteria different from those used by the EIA.
Energy traders also kept an eye out for what might be next from the Organization of Petroleum Exporting Countries.
Libya's top OPEC official, Shokri Ghanem, said Tuesday that there is still excess crude in the world oil market which the cartel needs to remove either through better compliance with already announced cuts or through a new output reduction, Reuters reported.
The oil cartel has already announced a reduction in output of 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. OPEC members will meet on March 15 in Vienna.
OPEC's decision will depend on where oil prices are in two weeks, said Nimit Khamar, an analyst at Sucden Financial Research.
"If prices remain around $40 or lower, then a supply cut of at least 500,000 barrels is likely, whereas if prices surge and are trading around the $50 mark, then OPEC may be more hesitant to cut further amid the risk of putting further burden on an already fragile global economy," Khamar said in a research note.
