U.S. crude oil ended sharply lower on Thursday, as the dollar strengthened against a basket of major currencies even as the post-Federal Reserve rally quickly ran out of steam amid mounting concerns of a supply glut with indications that global stockpiles will continue to rise.
An Organization of the Petroleum Exporting Countries (OPEC) official said the group had no option but to maintain its production levels or risk losing market share to non-OPEC producers.
Oil prices had rallied yesterday after the Federal Reserve pushed back expectations of interest rate hike to September.
Inventories continued to rise around the world, with U.S. storage facilities bursting at the seams. Stockpiles at the storage and trading hub in Cushing, Oklahoma increased by about 2.9 million barrels last week.
Yesterday, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 9.6 million barrels in the week ended March 13, while analysts expected an increase of 3.7 million barrels. This was the tenth consecutive week of increase.
The report showed U.S. crude oil inventories at 458.5 million barrels end last week. The stockpiles have been climbing every week since the week ended January 9.
Light Sweet Crude Oil futures for April delivery dropped $0.70 or 1.6 percent to settle at $43.96 a barrel on the New York Mercantile Exchange Thursday.
Crude prices for April delivery scaled a high of $44.71 a barrel intraday and a low of $42.75.
Light Sweet Crude Oil futures for May delivery, the most actively traded contract, dived $1.12 or 2.4 percent to settle at $45.53 a barrel on the New York Mercantile Exchange Thursday.
Crude prices for May delivery scaled a high of $46.81 a barrel intraday and a low of $44.77.
On Wednesday, U.S. crude futures for April delivery surged $1.20 or 2.8 percent to settle at $44.66 a barrel, as the dollar tumbled after the Fed Reserve gave indications there would be no rate hike in April, but possibly in July or September.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 99.42 on Thursday, up from its previous close of 97.82 on Wednesday in late North American trade. The dollar scaled a high of 99.43 intraday and a low of 97.21.
The euro trended lower against the dollar at $1.0622 on Thursday, as compared to its previous close of $1.0864 in North American trade late Wednesday. The euro scaled a high of $1.0903 intraday and a low of $1.0614.
On the economic front, first-time claims for U.S. unemployment benefits increased slightly in the week ended March 14, a report from the Labor Department said Thursday. The initial jobless claims inched up to 291,000, an increase of 1,000 from the previous week’s revised level of 290,000. Economists expected jobless claims to rise to 293,000 from the 289,000 originally reported for the previous week.
Manufacturing activity in the Philadelphia region has increased at a modest pace in March, a report from the Federal Reserve Bank of Philadelphia showed Thursday, although the index of regional manufacturing activity unexpectedly showed a slight decrease. The Philly Fed’s diffusion index of current activity edged down to 5.0 in March from 5.2 in February. Economists expected the index to climb to 7.0.
A Conference Board’s report on Thursday showed another modest increase by its index of leading U.S. economic indicators in February, continuing to point to short-term growth. The Board’s leading economic index edged up by 0.2 percent in February, matching the increase seen in January. The increase was in line with economists’ estimates.
Elsewhere, eurozone labor costs growth slowed for the second consecutive quarter in the three months to December 2014, figures from Eurostat revealed Thursday. The nominal hourly labor costs grew a working-day adjusted 1.1 percent year-on-year following 1.4 percent gain in the third quarter. In the three months to June, labor costs had risen 1.5 percent.
U.K. gross mortgage lending declined in February as housing activity remains weak, the Council of Mortgage Lenders reported Thursday. Gross mortgage lending reached GBP 13.4 billion in February, down by around 9 percent from both January and from last year.
The material has been provided by InstaForex Company – www.instaforex.com