Crude-oil futures jumped 3.3% Thursday to settle at $93.99 a barrel, as a combination of economic signals overcame worries about weak oil demand and high inventories.
Traders said prices were due for a rebound after both the U.S. and European benchmark crudes shed 3.7% over the previous two days on signs of sluggish demand growth in the U.S. and China, the world's top two oil consumers.
The oil rally was slow to start, despite a move by the European Central Bank to cut its main refinancing rate by 25 basis points and news that new claims for U.S. unemployment benefits hit a five-year low in the latest week. But strength in U.S. equities prices sparked a risk-on sentiment that spurred oil-market players to jettison worries about an oversupplied market, including the highest U.S. crude stocks since 1981.
The Standard and Poors 500-share index posted its biggest gain since April 23 and closed at a record high.
"The equities are pushing higher and we're seeing some carry over into crude," said Gene McGillian, analyst and broker at Tradition Energy.
Traders said the market's hope is that the strong signal from the latest U.S. weekly jobs figure will translate into a healthy showing in Friday's widely watched figure for April non-farm payrolls.
Light, sweet crude oil for June delivery settled 3.3%, or $2.96 higher, at $93.99 a barrel. The gain was the biggest single-day rise since Nov. 6, 2012. But prices still are 51 cents below Monday's settlement.
ICE June Brent crude settled 2.9%, or $2.90 higher, at $102.85 a barrel. Brent's rise also was the biggest since Nov. 6.
"I don't think anyone thinks that everything is full-speed ahead in the global economy now. We are in a near-term range of $85-$98 a barrel and we can see a $1 or $2 move without any problem," Mr. McGillian said.
"If you look solely at the supply figures, we should be falling out of bed," said Phil Flynn, analyst at Price Futures. But he said moves by the ECB, the U.S. Federal Reserve and the Bank of Japan to add stimulus to the market were overwhelming the poor market fundamentals.
Data from the Energy Information Administration, released Wednesday, showed that U.S. implied demand for gasoline fell 3.8% last week to its lowest level at the end April in 10 years. Inventory levels are now sufficient to cover 25.7 days of current weak demand, the highest level of cover in end April since 1999.
June-delivery reformulated gasoline futures settled up 2.3%, or 6.13 cents higher, at $2.7806 a gallon. The contract fell 3% Wednesday, its biggest one-day drop in four weeks, in response to the EIA data. In a sign of the scope of recent market volatility, the sharp rise was on the second-largest in the past week, as then-front-month May futures climbed 6.44 cents a gallon on April 25.
June heating oil settled up 2.4%, or 6.66 cents higher, at $2.855 a gallon. Heating oil posted the biggest one-day dollar and percentage gain since Nov. 19, 2012 in snapping a four-day losing streak.
Copyright (c) 2012 Dow Jones & Company, Inc.
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