Crude Oil Ends Below $100 As Inventories Rise

U.S. crude oil snapped a two-day gain to end sharply lower on Wednesday, after a weekly oil report from the Energy Information Administration showed crude stockpiles in the U.S. to have risen, albeit less than expected last week. Oil prices were also impacted after the U.S. Federal Reserve disclosed its monetary policy statement which further trimmed the monthly bond buying program by $10 billion.

Crude prices dropped about 1.8 percent for the month.

The U.S. Energy Information Administration data earlier Wednesday showed U.S. crude oil inventories to have risen by 1.7 million barrels in the week ended April 25, while analysts expected an increase of 2.1 million barrels. Stockpiles aggregated 399.4 million barrels, the highest level of inventories since late August 1982.

Gasoline stocks rose by 1.6 million barrels last week, with analysts anticipating a decline of 1.75 million barrels. Inventories of distillate, including heating fuel, rose by 1.9 million barrels, even as analysts projected an increase of 1.0 million barrels.

The U.S. Federal Reserve went ahead with a further cut to its bond-buying program by $10 billion to $45 billion, the fourth straight month of reduction. The cut came despite some soft growth in the economy with the first quarter U.S. gross domestic product inching up just 0.1 percent. However, the Fed held on to its benchmark federal rate at zero, which it has maintained since December 2008.

Light Sweet Crude Oil futures for June delivery, the most actively traded contract, plummeted $1.54 or 1.5 percent to close at $99.74 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for June delivery scaled a high of $100.76 a barrel intraday and a low of $99.35.

Late Tuesday, a report from the American Petroleum Institute showed U.S. crude inventories to have risen by a bigger than expected 3.0 million barrels last week.

Yesterday, crude oil ended higher, lifted by lingering concerns over escalating tensions in Ukraine and worries of possible supply disruptions from Russia.

In economic news from the U.S., The Commerce Department said gross domestic product inched up by just 0.1 percent in the first quarter of 2014 compared to the 2.6 percent increase in GDP in the fourth quarter of 2013. The consensus estimate was for a 1.2 percent sequential increase in first quarter growth.

MNI Indicators said the Chicago business barometer surged up to 63.0 in April from 55.9 in March, with a reading above 50 indicating growth in Chicago-area business activity. Economists expected barometer at a reading of 57.0. The business barometer has thus bounced off the seven-month low set in March to reach its highest level since last October.

Meanwhile, ADP said private sector employment in the U.S. surged by 220,000 jobs in April compared to economist estimates for an increase of about 210,000 jobs. The report also showed notable upward revisions to the job growth in the two previous months, with private sector employment jumping by 209,000 jobs in March and 193,000 jobs in February.

German unemployment declined more-than-expected in April, indicating economic recovery to have pushed companies to hire more staff. The number of people out of work declined 25,000 from March to 2.872 million in April, the Federal Labor Agency reported Wednesday. This was the fifth consecutive decline in unemployment. Economists forecast unemployment to decrease by 10,000 in April.

Eurozone inflation accelerated less-than-expected in April, indicating slower pace of price increase that may not be sufficient to avert the risk of deflation. Inflation rose to 0.7 percent in April from a 52-month low of 0.5 percent in March, flash estimates from Eurostat showed Wednesday. However, the rate was slightly slower than the 0.8 percent forecast by economists.

Published: 2014-04-30 19:59:00 UTC+00

Crude Oil Ends Below $100 As Inventories Rise