Oil surged the most in three months as global equities erased losses sparked by the U.K.’s secession vote and a weaker dollar bolstered the appeal of commodities.
Futures climbed 4.6 percent in New York. The dollar fell against most of its peers, while stocks rose on the prospect of stimulus in major economies. U.S. crude supplies probably slipped 3 million barrels last week, according to a Bloomberg survey before government data Wednesday. Royal Dutch Shell Plc said the Trans Niger pipeline in Nigeria, capable of shipping 180,000 barrels a day, was halted after the discovery of a leak.
“Equities are at new highs and the dollar’s lower; these are the primary drivers,” said Kyle Cooper, director of research at IAF Advisors and Ion Energy in Houston. “Crude and the dollar usually move in opposite directions, and the relationship is stronger than normal now.”
Oil retreated in recent weeks as a rally spurred by supply disruptions in Nigeria and Canada and falling U.S. output lost momentum. Prices remain up about 70 percent from a 12-year low in February, a recovery that has prompted American producers to return drilling rigs to service. The rate of decline in non-OPEC supply will slow next year, OPEC said in a report Tuesday.
West Texas Intermediate oil for August delivery rose $2.04 to $46.80 a barrel on the New York Mercantile Exchange. It’s the biggest one-day gain since April 8. Prices settled at $44.76 on Monday, the lowest since May 10. Total volume traded was 35 percent above the 100-day average at 2:59 p.m.
Bren t advanced $2.22, or 4.8 percent, to $48.47 a barrel on the London-based ICE Futures Europe exchange. It’s also the biggest gain since April 8. The global benchmark closed at a 90-cent premium to WTI for September delivery.
“We tested the low end of the range of $45 to $50 yesterday. Prices dropped below $45 and the buying started again,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $4.9 billion.
The Dow Jones Industrial Average reached a record while the Standard & Poor’s 500 Index extended an all-time high. The S&P 500 Oil & Gas Exploration and Production Index was up 5.1 percent at 3:01 p.m., heading for biggest gain since April 12.