News Column

Crude Oil Ends Above USD102 On Ukraine, Supply Data

May 14, 2014

WASHINGTON (Alliance News) - US crude oil moved up for a third straight session to end at a more than three-week high Wednesday, as the situation in Ukraine continued to escalate after an ambush by pro-Russian separatists resulted in the death of at least seven Ukrainian soldiers. Concerns over likely supply disruptions from Russia and uncertainty about Libyan oil shipments also contributed to the rise.

Data from the US Energy Information Administration earlier Wednesday showed US crude oil inventories to have risen 0.95 million barrels in the week ended May 9, while analysts expected a decline of 1.50 million barrels. Stockpiles aggregated 398.5 million barrels, up from the earlier week's total of 397.6 million barrels.

Gasoline stocks dropped by 0.77 million barrels last week, while analysts anticipated a decline of 1.0 million barrels. Inventories of distillate, including heating fuel, declined 1.1 million barrels, even as analysts anticipated an increase of 1.0 million barrels. The EIA report also showed a decline of about 0.60 million barrels at Cushing storage hub for the week.

Light Sweet Crude Oil futures for June delivery, the most actively traded contract, gained USD0.67 or 0.7% to close at USD102.37 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for June delivery scaled a high of USD102.65 a barrel intraday and a low of USD101.83.

On Tuesday, crude oil futures ended higher amid concerns over the ongoing unrest in Ukraine and possible disruptions in oil supply from Russia and Libya.

The dollar index, which tracks the US unit against six major currencies, traded at 80.06 on Wednesday, down from its previous close of 80.12 late Tuesday in North American trade. The dollar scaled a high of 80.13 intraday and a low of 79.99.

The euro traded higher against the dollar at USD1.3708 on Wednesday, as compared to its previous close of USD1.3703 late Tuesday in North America. The euro scaled a high of USD1.3731 intraday and a low of USD1.3698.

In economic news from the US, a report from the Labor Department showed producer prices to have risen by much more than anticipated 0.6% in April, following a 0.5% increase in March. Economists had been expecting producer prices to edge up by about 0.2%.

Core producer prices, which exclude food and energy, also showed continued growth, climbing by 0.5% in April after rising by 0.6% in March. Core prices had been expected to rise by 0.2%.

Meanwhile, the Bank of England on Wednesday settled market speculations over an early interest rate hike, indicating it was necessary to absorb the slack in the economy before tightening policy rates. The central bank in its May Inflation Report said policymakers see more scope to make greater inroads into slack before raising the interest rate.

The UK unemployment rate dropped to a five-year low in the first quarter, as economic recovery added more jobs and pay growth exceeded consumer price inflation. The ILO jobless rate declined to 6.8% during January to March, the lowest since February 2009, from 7.2% in October to December, data from the Office for National Statistics showed Wednesday. The rate came in line with expectations.

Eurozone industrial production dropped in March, driven by declines in the output of the big four countries, raising concerns over the strength of the economic recovery in the 18-nation economy. Production shrunk 0.3% in March following a 0.2% increase in the previous month. This was in line with economists' expectations.

All the big four economies registered declines in output during March, with production falling 0.2% in Germany and 0.7% in France. Output fell 0.6% in Spain and 0.5% in Italy.

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Source: Alliance News

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