NEW YORK (Reuters) - 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.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 8, 2017. REUTERS/Brendan McDermid

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 .STOXX closed up 0.13 percent after declining the four previous sessions.

MSCI's all-country world stock index .MIWD00000PUS was off 0.3 percent, pulled lower by energy stocks.

The euro fell to a five-day low after the payrolls data and ahead of a meeting of the European Central Bank on Thursday.

Traders and investors expect the ECB to maintain its loose monetary policy despite rising inflationary pressures.

The dollar has rallied by about 2.5 percent against a basket of major trading currencies over the past five weeks.

The dollar index .DXY gained 0.28 percent at 102.100. The dollar rose 0.33 percent against the Japanese currency JPY= to 114.34 yen and edged up 0.25 percent to $1.0539 versus the euro EUR=.

The strong gain in private-sector jobs pushed benchmark U.S. Treasury yields to their highest since December.

The 10-year U.S. Treasury note yield US10YT=RR hit 2.583 percent, a level last seen on Dec. 20, before easing to 2.5560 percent, up almost 5 basis points from late on Tuesday, according to Thomson Reuters data.