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By Herbert Lash Reuters NEW YORK

Crude prices plunged more than 5 percent on Wednesday on a spike in U.S. oil stockpiles, while the dollar gained on increased expectations the Federal Reserve will raise U.S. interest rates next week after a robust report on private sector jobs.

The surge in crude inventories to a record high slammed energy stocks, leading much of Wall Street lower, and stoked concerns a global oil glut may persist even as the Organization of the Petroleum Exporting Countries tries to prop up prices with output curbs.

U.S. energy stocks .SPNY slumped 2.5 percent in their biggest decline since mid-September.

More crude selling could be triggered if oil prices break below support levels after trading in a tight range this year, analysts said. Rising production also is hurting prices.

"The other thing unnerving the market is rapid growth in U.S. crude production," said Andrew Lebow, a senior partner at Commodity Research Group in Darien, Connecticut.

The U.S. Energy Information Administration reported crude stocks rose by 8.21 million barrels, above a forecast 1.9 million. [API/S]

Brent crude LCOc1, the international benchmark, settled down $2.81 at $53.11 a barrel. U.S. crude CLc1 fell $2.86 to settle at $50.28.

The dollar gained after U.S. hiring in the private sector surged in February, underscoring the economy's strength and adding to expectations the Fed will raise rates when policy-setters meet on March 15.

The ADP National Employment Report showed private payrolls grew by 298,000 jobs last month, well above economists' expectations for a gain of 190,000. January's private payrolls gains were revised up to 261,000 from 246,000.

Traders now see an 88.6 percent implied chance the Fed will raise rates by 25 basis points at its meeting, up from 81.9 percent on Tuesday, according to the CME Group's FedWatch tool.

The likelihood the Fed will raise rates has not unnerved investors who, unlike during the "taper tantrum" of 2013, now perceive the U.S. economy as strong enough to withstand a rate hike and welcome a more normalized monetary policy.

"Even if the Fed raises rates next week, it would be to 75 basis points which is historically very low and is still considered very easy money," said Adam Sarhan, chief executive of 50 Park Investments in Orlando, Florida.

The ADP report initially buoyed Wall Street as financial and industrial stocks rose, but the surge in oil stockpiles offset enthusiasm over the jobs data.

The Dow Jones Industrial Average .DJI closed down 69.03 points, or 0.33 percent, at 20,855.73. The S&P 500 .SPX lost 5.41 points, or 0.23 percent, to 2,362.98 and the Nasdaq Composite .IXIC added 3.62 points, or 0.06 percent, to 5,837.55.

In Europe, the pan-regional STOXX 600 index closed up 0.13 percent after declining the four previous sessions.

MSCI's all-country worl(Reporting by Herbert Lash; Editing by Nick Zieminski and James Dalgleish)d stock index .MIWD00000PUS was off 0.3 percent, pulled lower by energy stocks.

 

(Reporting by Herbert Lash; Editing by Nick Zieminski and James Dalgleish)

 

 

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  • Trying to pay the bills, lol



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