News Column

Crude Oil Ends Higher As Dollar Weakens

May 29, 2014

WASHINGTON (Alliance News) - US crude oil snapped a two-day loss to end higher on Thursday, as the dollar trended lower against a basket of major currencies. Even as crude oil rebounded from a steep fall yesterday, data from the official Energy Information Administration showed a more than expected increase in US crude oil stockpiles last week.

Investors also mulled over the supply scenario against the backdrop of developments in eastern Ukraine where clashes between pro-Russian separatists and Ukrainian government forces continued.

Earlier today, data released by the US Energy Information Administration showed US crude oil inventories to have risen 1.7 million barrels in the week ended May 23, while analysts expected an increase of 1.0 million barrels.

Gasoline stocks dropped by 1.8 million barrels last week, while analysts anticipated a decline of 0.2 million barrels. Inventories of distillate, including heating fuel, declined 0.2 million barrels, even as analysts anticipated an increase of 0.29 million barrels. The EIA report also showed a decline of about 1.5 million barrels at Cushing storage hub last week.

Meanwhile, industry data released by the American Petroleum Institute late on Wednesday showed crude stockpiled to have risen by 3.5 million barrels.

Investors also weighed some positive economic data from the US, with first-time claims for unemployment benefits dropping much more than expected in the week ended May 24. Meanwhile, a National Association of Realtors report on Thursday showed pending home sales in the US increased for the second consecutive month in April, although much less than anticipated.

Nevertheless, US gross domestic product declined in the first three months of 2014, primarily reflecting a downward revision to private inventory investment, a Commerce Department report showed Thursday, the first since the first quarter of 2011.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, gained USD0.86 or 0.8% to close at USD103.58 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for July delivery scaled a high of USD103.94 a barrel intraday and a low of USD102.61.

On Wednesday, crude oil futures ended sharply lower with focus on the official US crude inventory data and developments in Ukraine which remains tense after clashes between pro-Russian separatists and Ukrainian government forces.

The dollar index, which tracks the US unit against six major currencies, traded at 80.49 on Thursday, down from its previous close of 80.55 late Wednesday in North American trade. The dollar scaled a high of 80.56 intraday and a low of 80.36.

The euro traded higher against the dollar at USD1.3605 on Thursday, as compared to its previous close of USD1.3591 late Wednesday in North American trade. The euro scaled a high of USD1.3625 intraday and a low of USD1.3586.

In economic news, revised government figures showed the US economy to have contracted by 1% in the first quarter, registering its biggest decline in three years. Economists expected revised figures to show a contraction of about 0.6%.

A Labor Department report showed jobless claims in the US to have declined to 300,000 in the week ended May 24, down 27,000 from the previous week. Economists expected jobless claims to dip to 317,000 from the 326,000 originally reported for the previous week.

Meanwhile, personal consumption expenditure in the US rose 3.1% in the first quarter, up from 3.0% in the previous quarter.

Data from the National Association of Realtors on Thursday showed pending home sales in US rose for the second consecutive month in April, although the rise was by a less than expected 0.4% to 97.8. In March, pending home sales had jumped 3.4%.

From Asia, retail sales in Japan contracted 4.4% on year in April, the Ministry of Economy, Trade and Industry said on Thursday - coming in at 11.011 trillion yen. That was shy of expectations for a contraction of 3.3% following the 11.0% spike in the previous month.

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Source: Alliance News

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