U.S. crude oil ended sharply lower on Friday, as the dollar tumbled against a basket of major currencies, under pressure from the Fed’s statement regarding rate hikes. Investors largely ignored the supply glut situation, despite indications that global stockpiles will continue to rise.
Oil futures recorded a weekly gain of about 4 percent, for the first time in five weeks.
With the Federal Reserve providing a somewhat muddled outlook on interest rate hikes two days ago, most commodities and currencies took off on a roller-coaster ride.
The Fed withdrew its promise to be patient on interest rate hikes, but then downgraded its assessment of the U.S. economy and signaled tightening would not occur until the second half of the year.
Fed Chief Janet Yellen took a dovish stand with some lower outlook for inflation and GDP growth, signaling that interest rate is likely to rise at a slower pace than expected earlier.
Crude oil initially rallied on the Fed’s statement indicating rate hikes will be pushed out until at least July, but prices then moved back toward recent 6-year lows.
However, traders continued to take stock of rising global inventories and the reluctance of OPEC and non-OPEC nations alike to cut supplies.
Light Sweet Crude Oil futures for April delivery surged $1.76 or 4 percent to settle at $45.72 a barrel on the New York Mercantile Exchange Friday.
Crude prices for April delivery scaled a high of $46.53 a barrel intraday and a low of $43.31.
Light Sweet Crude Oil futures for May delivery, the most actively traded contract, jumped $1.04 or 2.3 percent to settle at $46.57 a barrel on the New York Mercantile Exchange Friday.
Crude prices for May delivery scaled a high of $47.43 a barrel intraday and a low of $44.82.
On Thursday, U.S. crude futures for April delivery surged $1.20 or 2.8 percent to settle at $44.66 a barrel, as the dollar strengthened even as the post-Federal Reserve rally quickly ran out of steam amid concerns of a supply glut.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.86 on Friday, down from its previous close of 99.07 on Thursday in late North American trade. The dollar scaled a high of 99.12 intraday and a low of 97.45.
The euro trended higher against the dollar at $1.0826 on Friday, as compared to its previous close of $1.0661 in North American trade late Thursday. The euro scaled a high of $1.0882 intraday and a low of $1.0650.
In economic news, eurozone current account surplus in January grew from a year ago, as trade surplus and primary income rose sharply, figures from the European Central Bank revealed Friday. The current account surplus rose to EUR 29.4 billion from EUR 18.1 billion a year ago. In December, the surplus was EUR 22.5 billion.
A measure of turning points in the German economy in coming months grew at a slower rate in January, data from the Conference Board showed Friday. The leading economic index for Germany rose 0.4 percent monthly after a 0.8 percent climb in the previous month. In the six months to January, the index added 0.3 points, moving back into positive territory for the first time since June 2014.
Germany’s producer prices dropped more-than-expected in February, figures from Destatis showed Friday. The producer price index fell 2.1 percent year-over-year in February, exceeding economists’ expectations for a 2.0 percent drop.
The U.K. budget deficit showed its smallest budget deficit for February since 2008 on robust income tax receipts suggesting that the government is on the course to achieve its budget targets. Public sector net borrowing excluding public sector banks declined by GBP 3.5 billion to GBP 6.9 billion in February, the Office for National Statistics said Friday. It was forecast to fall to GBP 8.4 billion.
The majority of the households in the UK perceived that the value of their houses increased in March, after moderating in the previous month, results of a survey conducted by Knight Frank and Markit Economics showed Friday. The house price sentiment index, or HPSI, rose to 57.5 in March from 56.5 in February. This marked the twenty-fourth consecutive month of the index remaining above 50.
The material has been provided by InstaForex Company – www.instaforex.com