The spot WTI crude oil price bounced 4.19% to an intraday high of $41.78 per barrel on Thursday, after the European Central Bank (ECB) announced
at its Governing Council meeting in Frankfurt that they would cut the overnight deposit rate to minus 0.3% from minus 0.2%, and leave its key lending rate unchanged at 0.05%. The ECB also said it decided to extend purchases of government bonds and other assets from the September 2016 target date through at least March 2017. Some analysts had expected the ECB to drop the overnight rate to minus 0.4% and the key lending rate to zero from 0.05%, as well as to expand its 1.1 trillion euro bond-buying program by 360 billion euros.
The ECBís hawkish move also sent the U.S. dollar, which is inversely correlated with the WTI crude oil price, tumbling against the euro, as the EUR/USD currency pair was quoted at 1.0938 dollars per euro on Thursday, up 3.08% for the day.
The crude oil got some support from an Energy Intelligence report on Thursday saying that Saudi Arabia may propose an eventual production cut of 1 million barrels a day, at the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna on Friday, which may take effect in 2016. Saudi Arabia would consider the cut only if a number of conditions are met, and output reduction would not be agreed to at the Friday meeting. Iran already rejected a Saudi call to join an OPEC production cut, saying it would move forward with plans to boost its output by 1 million barrels a day after western sanctions over its nuclear program are lifted next year, according to The Wall Street Journal.
The spot WTI crude oil price has been on a wild ride, as it tanked 3.72% on Wednesday, after the U.S. Energy Information Administration (EIA) said that U.S. commercial crude oil inventories rose to 489.4 million barrels, up 1.2 million barrels in the week ending November 27. Analysts had expected an inventory draw of 668K barrels. The EIA said stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest U.S. oil-storage hub for WTI futures, rose by 428K barrels to 59.026 million barrels, approaching the April 17 peak level of 62.2 million barrels. Total storage capacity for the site was 71.4 million barrels as of March 31, according to the EIA.
Excluding the Strategic Petroleum Reserve (SPR) of about 695.1 million barrels, U.S. crude oil inventories remain near the peak level of 490.9 million barrels set in the week ending April 24, 2015. On Tuesday, the American Petroleum Institute (API), an industry group that represents about 400 oil and natural gas corporations, said its crude oil inventory data for the week ended November 27 showed a build of 1.6 million barrels, while stocks of crude at Cushing were up 453K barrels.