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US crude settles up $1.71, or 3.47%, at $50.99 a barrel

Crude oil settles at $50.99 per barrel

Crude oil futures closed higher on Wednesday after Saudi Arabia's oil minister said oil demand was growing and data showed Chinese factories were producing more than expected.

A larger-than-expected U.S. crude inventory build reported by the government initially hemmed in bullish sentiment, while falling refined product inventories provided support.

U.S. April crude settled up $1.71, or 3.47 percent, at $50.99 a barrel. Meanwhile, was up $2.70 at $61 a barrel.

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"The report is relatively bullish, despite the large crude oil inventory build," said John Kilduff, partner at Again Capital LLC.

"The draw downs in the refined product categories represent an offset and are supportive," Kilduff added.

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U.S. crude stocks rose by 8.4 million barrels last week to a record 434.07 million, the Energy Information Administration showed on Wednesday. Inventories increased by 2.4 million barrels at Cushing, Oklahoma, the delivery point for the U.S. crude contract.

U.S. gasoline stocks fell by 3.1 million barrels, the EIA said, more than analysts surveyed by Reuters expected. Distillate stocks—including diesel and heating oil—fell by 2.7 million barrels, a smaller dip than expected.

U.S. front-month March ultra-low sulfur diesel and RBOB gasoline futures were supported by the EIA data, ahead of Friday's contract expirations.

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Distillate stocks on the East Coast, which has been battered by freezing temperatures in recent weeks, were at their lowest point for the period since 2000.

Ahead of the EIA data, oil got a boost from data showing China's factory sector expanded this month, according to the flash HSBC/Markit Purchasing Managers' Index.

Crude oil inventories build

As the world's second largest oil consumer behind the United States, even small changes in Chinese demand can move oil prices.

Oil also received a lift from comments by Saudi oil minister Ali al-Naimi, who spoke to reporters in the port city of Jizan, Saudi Arabia.

"Markets are calm now ... demand is growing," said Naimi, who drove a change in the strategy of the Organization of the Petroleum Exporting Countries last year, when it decided not to adjust production despite a sharp fall in oil prices.

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Simon Wardell, oil analyst at Global Insight, said Naimi's comments reflected a desire for stability in the market.

"They want to find out where the floor price is. I think they are indicating that we are not that far off the floor in the current price," Wardell said.