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By Bloomberg

Oil prices are swinging the most since April 2009 as producers reduce spending to keep U.S. crude production from growing beyond a three-decade high.

West Texas Intermediate gained 4.2 percent, erasing an earlier 2.3 percent decline. Prices have moved an average of $1.70 a day this year, up from 92 cents during the first 24 days of 2014. Crude inventories expanded by 6.33 million barrels to 413.1 million last week, the highest level in weekly records compiled since August 1982, the Energy Information Administration reported Wednesday.

Oil’s swings have intensified since the Organization of Petroleum Exporting Countries decided in November to let rival producers deal with a global surplus that Iran’s oil minister pegged at 2 million barrels a day in an interview with state television. That’s about 6 percent of the group’s production last month of 30.9 million.

“Volatility is here to stay,” Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $120 billion of assets, said by phone. “We don’t have headlines pushing us to new lows or highs now. The market may be trying to put in a floor but I think there’s a little more downside risk.”

Widest Gap

WTI for March delivery rose $2.03 to settle at $50.48 a barrel on the New York Mercantile Exchange. The contract lost $4.60 to $48.45 on Wednesday, halting the largest four-day rally since January 2009. The volume of all futures traded was 84 percent above the 100-day average at 2:55 p.m.

Brent for March settlement increased $2.41, or 4.4 percent, to end the session at $56.57 on the London-based ICE Futures Europe exchange. Volume was 43 percent higher than the 100-day average. The North Sea oil closed at a $6.09 premium to WTI, the widest gap since September.

“Commodity traders are always looking for volatility and lots of open interest because of the opportunities it offers,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania, said by phone. “It’s no surprise that volume has popped given the volatility.”

After floor trading closed, Saudi Arabia reduced the official selling price for March shipments to Asia for Arab Light crude by 90 cents to $2.30 a barrel below Middle East benchmarks, the lowest in at least 14 years when Bloomberg began gathering data.

The European benchmark oil has rebounded since mid-January from the lowest level in almost six years amid speculation that reduced investment will curb production. Brent closed at $57.91 on Tuesday, more than 24 percent above the Jan. 13 close of $46.59, meeting a common definition of a bull market.

Bull Market

Chevron Corp., BP Plc and Royal Dutch Shell Plc lowered their spending targets after prices slumped. Weatherford International Plc, an oilfield services company that’s lost half its value in six months, plans to cut 5,000 jobs in the first quarter, joining larger competitor Schlumberger Ltd. in responding to lower oil prices.

“We’re beginning to see supply and demand rebalance,” said Chris Lafakis, a West Chester, Pennsylvania-based senior economist at Moody’s Analytics. “The U.S. is the most flexible producer, and now the marginal producer, it should be the first place we see a hit on production growth and the first place it returns. We’re looking for U.S. production to peak in May give or take a month.”

The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the U.S. Oil Fund, ended at 62.73 on Feb. 4, the highest since April 2009.

Global Supplies

“The market is all over the place right now,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “The overriding story right now is the rise in supply.”

Global supply will exceed demand by 2 million barrels a day in the first half of 2015, Iranian Oil Minister Bijan Namdar Zanganeh said in an interview on state TV on Wednesday. Iran ranks as OPEC’s fourth-largest producer, according to Bloomberg estimates for January.

“The market is super-volatile,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said by phone. “It looks like $44 will be a low that holds for a while. There’s a lot of nervousness about Europe but we’ve priced in a lot of bearish sentiment already.”

The euro climbed as investors assessed bailout negotiations among Greece and European leaders. Price swings for the euro versus the dollar reached almost the highest level in three years as talks between Greece and Germany Thursday yielded no agreement on narrowing their differences. A weaker dollar bolsters oil’s appeal as an investment.

Currency Movement

“When prices are moving $5 to $10 a day, you know it’s not the economic fundamentals alone that are moving the market,” Lafakis said. “The currency market has been very volatile as well and oil has been tracking it recently.”

Gasoline futures for March delivery advanced 4.31 cents, or 2.9 percent, to settle at $1.5248 a gallon in New York. March ultra low sulfur diesel increased 3.93 cents, or 2.2 percent, to $1.8059.

Regular gasoline at U.S. pumps is rebounding after dropping to the lowest level since April 2009 on Jan. 25. The average retail price rose 4 cents to $2.151 a gallon on Wednesday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.