04/24/2013 12:27 EDT | Updated 06/24/2013 05:12 EDT

Oil rises above US$91 a barrel on speculation of European interest rate cut

NEW YORK, N.Y. - Oil had its biggest daily gain since December on Wednesday as oil supplies rose less than expected in the U.S. and speculation grew that the European Central Bank will cut interest rates.

Benchmark West Texas Intermediate crude for June delivery rose $2.25, or 2.5 per cent, to finish at US$91.43 a barrel Wednesday on the New York Mercantile Exchange.

Oil rose as expectations mounted among investors for a rate cut next week from the ECB following another weak business survey in Germany, Europe's biggest economy. The gains grew after the U.S. Energy Department said crude oil supplies rose by 900,000 barrels, or 0.2 per cent, to 388.6 million barrels last week. Analysts had expected an increase of 1.4 million barrels.

In addition, the U.S. dollar was weaker against the euro, which helped push oil higher. Oil is traded in dollars, so it becomes more attractive to investors with foreign currency as the dollar softens.

A big decline in U.S. gasoline supplies was also positive for oil prices, indicating that demand picked up somewhat, although it was still down 1.7 per cent over the four weeks ended April 19.

Brent crude, which is used to price oil used by many U.S. refiners, rose $1.42 to end at US$101.73 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex, wholesale gasoline rose three cents to finish at US$2.75 a U.S. gallon (3.79 litres), heating oil added three cents to end at US$2.84 a gallon and natural gas fell seven cents to finish at $4.17 per 1,000 cubic feet.