Crude oil futures surged by over 3.5 per cent in the domestic market on Tuesday as investors and speculators booked fresh positions in the energy commodity amidst speculation that OPEC producers are likely to make steep cuts in investments that will ease production and stem a global supply surplus.
The EIA said that US crude oil output was 120,000 barrels per day lower in September than in August, predicting production to continue declining through next August. Speculation of a possible cooperation between OPEC and Non OPEC producers also bolstered prices.
A rise in US consumer confidence signaled a pickup in the world's biggest economy, lifting the demand outlook for the fuel. The IBD/TIPP Economic Optimism Index climbed to 47.3 in October from 42 in September.
Investors shrugged off a reduction in global growth forecasts in 2015 and 2016 by the IMF to 3.1 per cent and 3.6 per cent, respectively, from an earlier predicted 3.3 per cent and 3.8 per cent.
Oil may extend gains today after an industry report showed a 1.2 million barrels drop in US crude oil inventories last week, easing concerns over a global supply glut.
At the MCX, Crude oil futures, for the October 2015 contract, closed at Rs 3,137 per barrel, up by 3.53 per cent, after opening at Rs 3,032, against the previous close price of Rs 3,030. It touched an intraday high of Rs 3,179.