(MENAFN- The Peninsula) Crude oil prices jumped as much 4 percent yesterday after a rally in US petrol and diesel due to a refinery outage helped crude futures advance from multi-month lows earlier in the session.
The dollar's drop to a near two-week low also made oil and other commodities denominated in the greenback more affordable to holders of the euro and other currencies.
Hedge funds and other big speculators raised their bullish exposure to US crude for the first time in seven weeks, trade data on Friday showed, even as most traders and investors feared weaker demand and higher supplies ahead.
In yesterday's session, gasoline futures jumped almost 4 percent, heading for its largest daily gain in a month, after BP Plc's 240,000 barrel per day crude distillation unit at its Whiting, Indiana, refinery, was shut by a malfunction.
Futures of ultra low sulfur diesel rose more than 3 percent, rebounding from last week's six-year lows.
Brent crude settled up $1.80 at $50.41 a barrel. It hit a six-month low of $48.24 earlier in the session. US crude settled $1.09 up at $44.96 a barrel.
It plumbed a 4-1/2 month of $43.35 in Asian trading.
Both benchmarks had fallen in the past six weeks, hampered by a supply glut.
"The strength in refined products is pulling crude prices higher today," said David Thompson, executive vice-president at Powerhouse, an energy-specialised commodities broker.
"A reduction in refinery activity should logically decrease the demand for crude, all things being equal. But the strong link between refined products and crude in the instance of a refinery issue creates the dynamic where the increased demand for the now, temporarily scarce gasoline outweighs the lessened demand for crude."
Refining margins hit a one-week high for gasoline and 2-1/2 month peak for diesel. Refined oil products usually rally during the summer in the United States, when driving activity peaks. This year, the run-up in gasoline came as early as April but lost steam lately as some traders and investors deemed the market had gotten ahead of itself.
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