U.S. crude oil ended sharply lower on Thursday, as the dollar strengthened after some upbeat data showed gross domestic product in the U.S. to have risen more than expected, even as official data showed oil production to have risen to nearly 9 million barrels a day — the most in over three decades.
U.S. crude stockpiles increased by less than expected 2.1 million barrels last week, according to data from the Energy Department. Nevertheless, concerns over excess supplies continue to persist due to the volume of oil being produced domestically.
Meanwhile, economic activity in the U.S. increased more than expected in the third quarter of 2014, a report from the Commerce Department showed Thursday. A narrower trade deficit contributed to the stronger than expected GDP growth, with trade adding 1.3 percentage points.
However, a Labor Department report showed first-time claims for U.S. unemployment benefits increased more-than-expected in the week ended October 25.
After its two-day monetary policy meeting, the Federal Reserve announced the end of its monthly asset buying program, QE3, yesterday.
The Fed said interest rates may remain around record lows for a “considerable time,” but added that rate hikes may happen sooner than markets expect if the economic recovery continues to gather steam. The Fed now believes under-utilization of labor resources to be gradually diminishing.
Light Sweet Crude Oil futures for December delivery, the most actively traded contract, plunged $1.08 or 1.3 percent to close at $81.12 a barrel on the New York Mercantile Exchange Thursday.
Crude prices for December delivery scaled a high of $82.09 a barrel intraday and a low of $80.80.
On Wednesday, crude oil futures ended sharply higher by $0.78 or 1.0 percent. Despite surrendering some gains, crude oil settled higher after the Fed ended its quantitative easing program as it raised its outlook for the labor market.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 86.13 on Thursday, up from its previous close of 85.99 late Wednesday in North American trade. The dollar scaled a high of 86.49 intraday and a low of 85.99.
The euro trended lower against the dollar at $1.2611 on Thursday, as compared to its previous close of $1.2632 late Wednesday in North American trade. The euro scaled a high of $1.2639 intraday and a low of $1.2548.
In economic news from the U.S., data from the U.S. Labor Department showed initial jobless claims to have edged up to 287,000 in the week ended October 25th, an increase of 3,000 from the previous week’s revised level of 284,000.
A report from the Commerce Department showed U.S. economic activity to have increased by more than expected 3.5 percent in the third quarter of 2014, compared to the 4.6 percent growth seen in the second quarter. Economists had expected GDP to climb by 3.0 percent.
Meanwhile, survey results from European Commission show eurozone economic confidence to have picked up in October from a 10-month low. The economic confidence index rose unexpectedly to 100.7 in October from 99.9 in the prior month. The score was expected to fall to 99.7.
Germany’s unemployment declined unexpectedly in October, suggesting an improvement in the labor market conditions despite weak economic developments. The number of people out of work decreased by 22,000 to 2.887 million in October, data from the Federal Labor Agency revealed Thursday. Economists had forecast an increase of 4,000.
Germany’s EU measure of inflation unexpectedly slowed in October after holding steady in the previous two months, preliminary estimates from Destatis showed Thursday. The harmonized index of consumer prices rose 0.7 percent annually following 0.8 percent increase in each of the previous three months. Economists had forecast a higher figure of 0.9 percent.
The material has been provided by InstaForex Company – www.instaforex.com