U.S. stocks closed a bit higher on Wednesday as better-than-expected earnings overshadowed oil's jump on a drop in inventories and a cold wave in the Northeastern United States.
The dollar slid on renewed worries about the ability of the United States to finance its swelling trade and current account deficits.
The yield on the benchmark 10-year U.S. Treasury note hit a six-week low of 4.07 percent as its price, which moves in the opposite direction, rose almost half a point - a day after the Federal Reserve said inflation was well contained.
Those reassuring words from the Fed signaled that it would not shift from its "measured" pace of tightening credit to more aggressive rate increases, which would be unwelcome in the bond market. On Tuesday, the Fed raised interest rates for the fifth time this year.
Oil prices surged nearly 6 percent as the U.S. government reported a decline in heating oil stocks in the midst of an arctic cold blast in the Northeast, the world's largest heating oil market. U.S. crude stockpiles also fell in the latest week.
Heating oil stocks are low in all major consuming centers, deepening the threat of a supply crunch if the northern winter is harsh.
Private forecaster AccuWeather has predicted it will be colder than normal in the eastern U.S. for the rest of December, raising demand for heating fuel.
On the New York Mercantile Exchange, January heating oil led the surge, adding 8.39 cents, or 6.4 percent, to settle at $1.3884 a gallon.
NYMEX January crude jumped $2.37, or 5.7 percent, to end at $44.19 a barrel in a third straight day of gains that has pushed prices up nearly $4 from four-month lows.
In London, IPE January Brent crude rose $2.97 to settle at $42.22 a barrel, the biggest one-day gain for the contract since 1991, as big-money hedge funds piled in to cover short positions.
The dollar plummeted as dealers raised fresh concerns about the ability of the United States to finance its ballooning trade and current account deficits.
A day after news of a record $55.5 billion trade deficit in October, the Treasury said portfolio inflows into the United States in the same month totaled $48.1 billion. That was not enough to cover the trade deficit and also served to underscore the dollar's structural weakness, analysts said.
By late afternoon in New York, the euro was up 0.72 percent at $1.3398 from late Tuesday, within 1 cent of its record $1.3470 high.
The dollar fell more than 1 percent to 104.29 yen after a key business survey from the Bank of Japan provided enough impetus to encourage heavy yen buying. The BoJ's tankan survey suggested the deterioration in Japanese business sentiment was not as bad as some in the market had feared.
The acute financing needs of the United States will be back in the spotlight on Thursday with the release of third-quarter current account data. Economists expect a deficit of $170.00 billion, wider than the second quarter's $166.2 billion gap. //