Oil advanced as much as 9.9 percent after European and Asian equity markets rallied. Prices also gained on forecasts that the U.S. Federal Reserve will cut rates today to help spur a recovery in the world's biggest fuel consuming country. China cut rates today and the European Central Bank may reduce them next week.
Crude oil for December delivery rose $5.69, or 9.1 percent, to $68.42 a barrel at 11:55 a.m. on the New York Mercantile Exchange. Futures are heading for the biggest gain since Sept. 22. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, are down 27 percent from a year ago.
The Federal Reserve may lower its benchmark interest rate by half a point to 1 percent today, according to the median forecast of economists surveyed by Bloomberg News.
U.S. inventories of crude oil and distillate fuel, a category that includes heating oil and diesel, rose last week, an Energy Department report showed.
Crude oil stockpiles climbed 493,000 barrels to 311.9 million barrels in the week ended Oct. 24, the department said. A 1.55 million-barrel gain was forecast, according to the median of 12 analyst estimates before the report.
Distillate inventories rose 2.33 million barrels to 126.6 million barrels last week. Analysts forecast that supplies increased 1.05 million barrels. Gasoline stockpiles dropped 1.51 million barrels to 195 million barrels, the first decline in five weeks. A 1.5 million-barrel gain was forecast.
U.S. fuel demand during the past four weeks averaged 18.9 million barrels a day, down 7.8 percent from a year ago, the report showed. Gasoline consumption was down 3.4 percent at 8.9 million barrels a day over the period.