US crude prices spike 5.6%, settle at $48.48

U.S. crude oil surged on Wednesday, posting its biggest one-day percentage gain in more than two years.

The advance came a day ahead of the Brent February contract's expiration and on the day that options for the U.S. contract expire, brokers and traders said. Other analysts pointed to the dollar's weakness against a basket of currencies.

West Texas Intermediate crude for February settled at $48.48 a barrel, up 5.6 percent for the session, marking its best day since June 2012.

Brent reversed earlier losses to trade about 3 percent higher. February Brent crude was up $2.24, at $48.27 a barrel. The contract slipped earlier on U.S. crude stockpiles and weak World Bank growth forecasts.

Energy Information Administration data showed U.S. crude stocks rose by 5.4 million barrels in the last week, far more than analysts' expectations for an increase of 417,000 barrels, pointing to continued oversupply in the market.

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A worker at Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian Basin outside Midland, Texas.
Brittany Sowacke | Bloomberg | Getty Images
A worker at Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian Basin outside Midland, Texas.

The World Bank lowered its 2015 and 2016 world economic growth forecasts on Tuesday, reinforcing worries about sluggish expansion in energy demand.

Oil prices that have fallen by about 60 percent since June are wreaking havoc on economies that depend on commodities exports. Russian Finance Minister Anton Siluanov called for a 10 percent spending cut on everything but defense on Wednesday.

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At the same time, Europe is on shaky ground despite the European Central Bank's bond-buying stimulus plan.

"The global economy is running on a single engine ... the American one," the World Bank's chief economist, Kaushik Basu, said. "This does not make for a rosy outlook for the world."

Analysts said prices would remain under pressure from oversupply, prompting cuts to price forecasts for 2015 and 2016.

Oil had tumbled nearly 5 percent on Tuesday before closing down 1.8 percent, with global benchmark Brent briefly trading at par with U.S. prices for the first time in three months as some traders moved to take advantage of ample U.S. storage space.

The U.S. shale oil boom and steady OPEC production have created a global supply glut. U.S.-based PIRA Energy Group said American stocks could be approaching 80 percent of capacity by the spring, in a report published before the EIA's data release.

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Outside the United States, some of the world's biggest oil traders have booked supertankers to store at least 25 million barrels at sea.

"OPEC is not going to come to the rescue of the market," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas. "The onus is on floating storage."

Producer club OPEC has shown no sign of changing strategy since it decided late last year to maintain output despite slowing Asian and European economic growth.