News Column

Crude Oil Plummets 2%, Ends Below USD96 A Barrel

August 14, 2014

WASHINGTON (Alliance News) - US crude oil plunged to end sharply lower Thursday, on demand growth concerns after some weak economic data from the US with first-time claims for unemployment benefits rising more than expected last week, and as well on the unexpected increase in oil stockpiles last week.

An official crude inventories data from the Energy Information Administration on Wednesday showed crude stockpiles in the US to have increased more than expected last week.

Elsewhere, eurozone recovery unexpectedly stagnated in the second quarter with Germany and Italy shrinking from the prior quarter.

The EIA, in its monthly short-term energy outlook, lowered its global oil consumption forecast for 2014 and 2015. Meanwhile, Libya is reportedly planning to resume oil exports from its largest port Es Sider next week. Earlier this week, the first shipment of oil from Libya left the Ras Lanuf port for the first time in almost a year.

Oil prices took a further hit on the back of some lackluster US retail sales figures, coupled with disappointing economic data from Europe and China, renewing concerns of a drop in demand.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, plummeted USD2.01 or 2.1% to close at USD95.98 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for September delivery scaled a high of USD97.59 a barrel intraday and a low of USD95.28.

On Wednesday, crude oil futures ended higher despite demand growth concerns after the US Energy Information Administration's weekly oil report showed stockpiles to have increased unexpectedly.

The dollar index, which tracks the US unit against six major currencies, traded at 81.60 on Thursday, down from its previous close of 81.61 late Wednesday in North American trade. The dollar scaled a high of 81.69 intraday and a low of 81.41.

The euro traded higher against the dollar at USD1.3368 on Thursday, as compared to its previous close of USD1.3365 late Wednesday in North American trade. The euro scaled a high of USD1.3407 intraday and a low of USD1.3350.

In economic news from the US, initial jobless claims rose more than expected to 311,000, up 21,000 from the previous week's revised level of 290,000. Economists expected jobless claims to edge up to 295,000 from the 289,000 originally reported for the previous week.

Another report from the Labor Department showed import prices to have edged down 0.2% in July, after inching up by 0.1% in June. Forecast was for a drop of 0.3% in import prices. Export prices were unexpectedly unchanged in July following a 0.4% drop in the previous month.

Meanwhile, economic recovery in the eurozone unexpectedly came to a halt in the second quarter, with Germany and Italy shrinking from the prior quarter. GDP was flat in the June quarter, after seeing an increase of 0.2% in the preceding quarter.

The pace of Chinese growth continue to be of concern, with both China's latest industrial production and retail sales figures were less robust than the month before.

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Source: Alliance News

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