Summary At 1715 GMT, US benchmark West Texas Intermediate for delivery in March leapt $1.78 to $31.66
LONDON (AFP) - Oil prices rallied Wednesday despite news that US crude inventories were at their highest level since 1930, as dealers took their cue instead from the weaker dollar.
At 1715 GMT, US benchmark West Texas Intermediate for delivery in March leapt $1.78 to $31.66 per barrel.
Brent North Sea crude for April jumped 1.88 compared with Tuesday s close to stand at $34.60.
The US government s Department of Energy (DoE) reported that American crude stockpiles soared 7.8 million barrels in the week to January 29.
That was almost double market expectations and took total crude inventories to 502.7 million -- a level last witnessed in 1930, according to the DoE.
Rising inventories typically means softer demand in the world s top oil consuming nation.
However, traders eyed the falling greenback, which makes oil cheaper for buyers using stronger currencies. That tends to stimulate demand and price levels.
"It is quite surprising how the oil market has reacted to the sharp build in oil inventories data," said analyst Fawad Razaqzada at trading firm City Index.
"This suggests that most of the bad news is in the price and WTI may stabilise around the $30 level now," he told AFP.
"The falling dollar is undoubtedly another reason why buck-denominated commodities, including gold, silver and oil are all trading higher today."
However, WTI had slid below $30 in earlier Asian deals on expectations that US petroleum stockpiles would rise further and exacerbate the already oversaturated global market.
New York crude oil had closed at $29.88 on the New York Mercantile Exchange on Tuesday, the first time the benchmark settled below $30 since January 21.
Russia meanwhile announced Tuesday that it pumped a post-Soviet record amount of crude oil and condensate in January of about 18.9 million barrels a day, as it fights to hold onto market share.
The Organization of the Petroleum Exporting Countries (OPEC) had twice last year rejected calls to trim output, as it sought to hurt high-cost US shale producers with lower oil prices.
The crude oil market had jumped last week on speculation that Russia and the 12-nation OPEC cartel would reach an agreement to slash output in the oversupplied market, but the rally had fizzled out on supply glut worries.
