U.S. crude oil dropped sharply for a second straight session to end at a one-week low on Tuesday, as the dollar strengthened against a select band of currencies after a slew of some mostly upbeat economic data from the U.S.
Crude oil plunged amid signs that OPEC will continue to pump oil at a breakneck pace. A weak dollar has also helped crude oil prices to tick higher for the past few weeks, even though U.S. oil inventories remain at 80 year highs.
OPEC nations meet on June 5 in Vienna, where they are likely to retain current output in hopes of stifling competition from non-OPEC nations. Low oil prices could also diminish the appeal of renewable energies.
In economic news, a number of U.S. reports were released on Monday, with a majority of them indicating mostly upbeat data. New orders for U.S. manufactured durable goods in April declined due to a pullback in orders for transportation equipment, but were in line with economists’ expectations.
Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, while new home sales rebounded more than expected in April. Consumer confidence in the U.S. improved modestly in May after declining sharply in April, but were ahead of estimates.
Light Sweet Crude Oil futures for July delivery, the most actively traded contract, plunged $1.69 or 2.8 percent, to settle at $58.03 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices for July delivery scaled a high of $60.25 a barrel intraday and a low of $57.71.
On Friday, crude oil for July delivery dropped $1.00 or 1.7 percent, to settle at $59.72 percent, on a strong dollar with investors weighing the Federal Reserve stand on holding interest rates at zero for the time being.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.26 on Tuesday, up from its previous close of 96.38 on Friday in late North American trade. The dollar scaled a high of 97.34 intraday and a low of 96.45.
The euro trended lower against the dollar at $1.0875 on Tuesday, as compared to its previous close of $1.0978 in North American trade late Friday. The euro scaled a high of $1.0983 intraday and a low of $1.0869.
In economic news, a Commerce Department report on Tuesday showed a modest decline in new orders for U.S. manufactured durable goods in April, largely reflecting a pullback in orders for transportation equipment. Durable goods orders dipped 0.5 percent in April, but came in line with economists’ estimate.
Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, a report from Standard & Poor’s showed Tuesday. The 20-City Composite Home Price Index rose 5.0 percent year-over-year in March, unchanged from the annual growth seen in February. Economists expected the rate of growth to slow to 4.6 percent.
A separate Commerce Department report on Tuesday showed U.S. new home sales rebounded more than expected in April, following the pullback seen in the previous month. New home sales climbed 6.8 percent to an annual rate of 517,000 in April from the revised March rate of 484,000. Economists expected new home sales to rise to a rate of 509,000 from the 481,000 originally reported for the previous month.
Meanwhile, consumer confidence in the U.S. improved modestly in May after declining sharply in April, the Conference Board said Tuesday. The consumer confidence index rose to 95.4 in May from a downwardly revised 94.3 in April. Economists expected the index to dip to 95.0 from the 95.2 originally reported for the previous month.
British retailers posted strong growth in sales this month and their outlook for sales and orders improved at an even stronger pace in the year to June, the quarterly Distributive Trades Survey from the Confederation of British Industry showed Tuesday.
The combined real gross domestic product of the 34-member countries of the Organization for Economic Cooperation and Development grew at a slower pace in the first quarter, a quarterly report from the OECD showed Tuesday. Real gross domestic product advanced 0.3 percent in the first quarter, slower than the 0.5 percent expansion seen a quarter ago.
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