Crude Oil Ends Higher As Inventories Decline Sharply

U.S. crude oil ended higher for a second straight session on Wednesday, after official data from the Energy Information Administration showed crude stockpiles in the U.S. to have declined much more than expected last week.

Nevertheless, the gains were somewhat capped as the dollar strengthened further after the Federal Open Market Committee decided against raising interest rates, preferring to wait for more confirmation that the economy is on solid ground.

Earlier today, a weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories declined 4.2 million barrels in the week ended July 24, while analysts expected stocks to decline 0.7 million barrels. The report showed total U.S. crude oil inventories at 459.7 million barrels end last week.

Stocks at Cushing, Oklahoma, the key delivery point for Nymex crude, dropped by 0.21 million barrels last week, while it was estimated to rise by 0.25 million barrels.

EIA said oil production in the U.S. dropped 151,000 barrels to 8.95 million barrels a day, from a week earlier.

Gasoline stocks dropped 0.4 million barrels last week, while analysts expected an increase of 0.5 million barrels. Inventories of distillate, including heating fuel, rose 2.6 million barrels last week, even as analysts anticipated an increase of 1.5 million.

Data from the oil and gas industry trade group, the American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have declined 1.9 million barrels last week.

Chinese demand for oil is seen declining just as Iraq, Iran and others are ramping up production. A stronger U.S. dollar is also hurting oil along with most commodities.

The Federal Reserve on Wednesday decided against raising interest rates, waiting for more confirmation that the economy is on solid ground. Since there was no post-decision press conference scheduled this month, the Fed’s decision to stand pat was in line with market expectations.

A move is far more likely in September or December when Fed Chair Janet Yellen has the opportunity to calm investor fears at scheduled press conferences.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, jumped $0.81 or 1.7 percent, to settle at $48.79 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for September delivery scaled a high of $49.52 a barrel intraday and a low of $47.39.

On Tuesday, crude oil futures for September delivery gained $0.59 or 1.2 percent, ahead of the official weekly oil report from the U.S. Energy Information Administration with traders anticipating a decline in stockpiles.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.84 on Wednesday, up from its previous close of 96.66 in late North American trade on Tuesday. The dollar scaled a high of 97.02 intraday and a low of 96.50.

The euro trended lower against the dollar at $1.1016 on Wednesday, as compared to its previous close of $1.1061 in North American trade late Tuesday. The euro scaled a high of $1.1086 intraday and a low of $1.1008.

In economic news, pending home sales in the U.S. unexpectedly declined in June, a report from the National Association of Realtors showed Wednesday, with pending sales pulling back off a nine-year high. NAR said its pending home sales index fell by 1.8 percent to 110.3 in June, while economists had expected the index to increase by 1.0 percent.

German consumer morale is set to stabilize in August as income expectations improved further from record level on strong domestic fundamentals, survey data from market research group GfK revealed Wednesday. Nonetheless, consumers assumed that the solution reached in the Greece debt dispute will have negative consequences on the economy. The forward-looking consumer sentiment index came in at 10.1 points, unchanged from July and in line with expectations.

French consumer confidence decreased unexpectedly in July after improving in the previous month, survey data from the statistical office INSEE showed Wednesday. The consumer confidence index dropped slightly to 93 in July from 94 in June. Economists had expected the index to remain stable at 94.0.

U.K. mortgage approvals increased more than expected in June and secured lending climbed most since 2008, data from the Bank of England showed Wednesday. The number of loan approvals for house purchase totaled 66,582 in June, up from 64,826 in May. It was forecast to increase marginally to 66,000.

The material has been provided by InstaForex Company –