Oil prices jumped more than 2.5 percent on Wednesday, their biggest daily rise in more than a month, lifted as the U.S. dollar weakened following a news conference by U.S. President-elect Donald Trump and on news that Saudi Arabia cut exports to Asia.
Oil’s sharp rebound off Tuesday’s settlement price, the lowest in a month, came despite government data showing a bigger-than-expected weekly build in U.S. crude and fuel inventories.
The U.S. dollar collapsed during Trump’s remarks, which disappointed investors who had sent the currency to its highest level in a week ahead of the news conference.
A stronger greenback makes dollar-denominated crude more expensive for users of other currencies.
Brent futures rose $1.46, or 2.7 percent, at $55.10 a barrel, while U.S. West Texas Intermediate crude gained $1.43, or 2.8 percent, to $52.25 per barrel. Both contracts notched their biggest daily percentage gains since Dec. 1.
“The main reason for the oil price rise was that the dollar was down,” said Phil Davis, managing partner at PSW Investments in Woodland Park, New Jersey.
Davis also said oil rose because some in the market focused more on a 579,000 barrel crude draw from the Cushing, Oklahoma storage hub last week, rather than the bigger-than-expected 4.1 million barrel overall U.S. inventory build in the U.S. Energy Information Administration’s (EIA) petroleum report.
That 4.1 million barrel build topped both the 1.2 million barrel build that analysts forecast in a Reuters poll and the 1.5 million barrel build in data Tuesday from the American Petroleum Institute, an industry group.
“It is one the most uniformly bearish reports in some time,” said John Kilduff, partner at energy hedge fund Again Capital in New York.
Saudi Arabia, the world’s top oil exporter, told some Asian customers that it will reduce their crude supplies slightly in February.
Still, there is plenty of oil to fill gaps left by OPEC. North American drilling is on the rise, while European and Chinese traders are shipping a record 22 million barrels of crude from the North Sea and Azerbaijan to Asia this month.
OPEC’s No. 2 producer Iraq plans to raise crude exports from its southern port of Basra to an all-time high of 3.641 million bpd in February.
U.S. crude production was projected to rise by 110,000 barrels per day in 2017 to 9 million bpd, according to EIA data.