Oil advanced as much as 9.9 percent on forecasts that the U.S. Federal Reserve rate cut will help spur a recovery in the world's biggest fuel-consuming country. China also lowered rates today and the European Central Bank may reduce them next week. Prices also rose because the dollar fell the most against the currencies of six major U.S. trading partners since 1985.
Crude oil for December delivery rose $4.75, or 7.6 percent, to $67.48 a barrel at the 2:30 p.m. close of floor trading 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 28 percent from a year ago.
The Federal Reserve lowered its benchmark interest rate by half a point to 1 percent today, matching a half-century low.
Investors often purchase crude oil and other dollar-priced commodities when the U.S. currency drops because of their use as an inflation hedge.
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.
The Organization of Petroleum Exporting Countries will ``probably'' cut crude-output quotas a second time to avoid the growth of inventories, Venezuelan Oil Minister Rafael Ramirez said in an interview on state television.
OPEC reduced its production target by 1.5 million barrels a day after meeting Oct. 24. Ramirez said the group would analyze the reaction of the oil market between that cut and a planned Dec. 17 meeting.
Russia, the world's second-biggest oil producer after Saudi Arabia, should consider joining OPEC, Leonid Fedun, deputy chief executive officer of OAO Lukoil, told a conference in Moscow today. Lukoil is Russia's second-biggest oil producer.
Brent crude oil for December settlement increased $4.93, or 8.2 percent, to $65.22 a barrel on London's ICE Futures Europe exchange. Futures touched $59.02 on Oct. 27, the lowest since Feb. 22, 2007.