US inventory data sparks short covering, oil futures spike higher

News of a dip in the pace at which oil stocks were building in the world´s largest economy led to a sharp bounce in crude futures.

On Wednesday afternoon the EIA, the statistical arm of the US Department of Energy, said commercial crude oil inventories in the country rose by 3.4m barrerls per day from the previous week.

At 480m barrels they continued to be at their highest in at least 80 years for this time of year.

However, the rate of build slowed week-on-week, prompting a bout of what traders term "short-covering".

As of 16:36BST West Texas crude futures were spiking 5.81% higher to $45.71 per barrel on the NYMEX.

"Overall the US inventories stats are not overly bullish for oil prices but the market got a little overextended to the downside and is seeing a short-squeeze after two-month lows," said Jasper Lawler, Market Analyst at CMC Markets.