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2015.04.0115:10:00UTC+00Crude Oil Surges To End Above $50 A Barrel On Gasoline Demand

U.S. crude oil snapped a three-day loss to end over five percent higher Wednesday, on increased demand for gasoline with the U.S. Energy Information Administration weekly report showing a marked decline in gasoline stocks last week. Prices have also been impacted after Iran's nuclear program talks with the West have been extended as the sides failed to reach an agreement by Tuesday's deadline.

With the dollar weakening against some major currencies, prices found support after gasoline stockpiles dropped more than expected, indicative of increased demand for motor fuel.

With talks on Iran's nuclear program continuing to linger, investors await to see whether a deal could see an influx of Iranian oil flooding markets.

Inventories are already swollen to record levels in the U.S.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 4.8 million barrels in the week ended March 27, while analysts expected an increase of 3.5 million barrels. The report showed U.S. crude oil inventories at 471.4 million barrels end last week. Stockpiles are at its highest in about 80 years and have been climbing for the 12th straight week since the week ended January 9.

Gasoline stocks dropped by 4.3 million barrels last week, with analysts anticipating a decline of 1.3 million barrels. Inventories of distillate, including heating fuel, increased 1.3 million barrels, even as analysts estimated a drop of 0.3 million.

EIA data also showed daily production to have declined by 36,000 barrels to 9.386 million barrels.

Data from the American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have risen by 5.2 million barrels last week. The oil and gas industry trade group also said gasoline inventories dipped 4.1 million barrels last week.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, surged $2.49 or 5.2 percent to settle at $50.09 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for May delivery scaled a high of $50.45 a barrel intraday and a low of $47.05.

On Tuesday, crude oil dropped $1.08 or 2.2 percent to settle at $47.60 a barrel, as investors awaited the outcome of Iran's talks with the West on its nuclear program, even as the dollar continued to strengthen.

On the economic front, private sector job growth in the U.S. continued to slow in March, a report from payroll processor ADP showed Wednesday. ADP said private sector employment climbed by 189,000 jobs in March following a slightly upwardly revised increase of 214,000 jobs in February. Economists had expected an increase of about 230,000 jobs compared to the addition of 212,000 jobs originally reported for the previous month.

Manufacturing activity in the U.S. saw continued growth in March, a report from the Institute for Supply Management indicated Wednesday, although the pace of growth slowed more than anticipated. The ISM said its purchasing managers index dropped to 51.5 in March from 52.9 in February. While a reading above 50 indicates continued growth in manufacturing activity, economists had expected the index to show a more modest drop to 52.5.

A Commerce Department report on Wednesday showed U.S. construction spending saw some further downside in February, after reporting a steep drop in spending in the previous month. Construction spending edged down 0.1 percent to an annual rate of $967.2 billion in February after tumbling 1.7 percent to a revised $967.9 billion in January. The modest drop was in line with economist estimates.

China's manufacturing sector slipped into contraction in March, the latest report from HSBC showed on Wednesday, with a PMI score of 49.6. That was higher than the preliminary reading of 49.2, although it was down from 50.7 in February. It also moved below the boom-or-bust line of 50 that separates expansion from contraction.

Eurozone manufacturing sector expanded more than initially estimated as growth accelerated in Germany, Spain, Italy and the Netherlands, final data from Markit Economics showed Wednesday. The Purchasing Mangers' Index rose to a 10-month high of 52.2 in March from 51 in February. The flash score was 51.9.

German manufacturing growth in March was faster than estimated earlier, marking the strongest improvement in eleven months, survey data from Markit Economics showed Wednesday. The Markit/BME Germany Manufacturing Purchasing Managers' Index climbed to 52.8 from 51.1 in February. The flash reading for the index was 52.4, released on March 24.

British manufacturing sector expanded at the fastest pace in eight months during March as orders and production growth gathered momentum. The Purchasing Managers' Index rose to 54.4 from 54 in February, which was revised down from 54.1, survey results from Markit Economics and the Chartered Institute of Procurement & Supply showed Wednesday. The latest PMI reading was in line with economists' expectations.

The French manufacturing sector continued to contract in March but at a slower than initially estimated pace, final data from Markit revealed Wednesday. The Purchasing Managers' Index came in at 48.8 in March, up from 47.6 in February. The flash score was 48.2.

U.K. labor productivity declined in the fourth quarter, while labor costs rose moderately, data from the Office for National Statistics showed Wednesday. Labor productivity as measured by output per hour dropped 0.2 percent in the fourth quarter from prior three months, when it grew 0.5 percent.

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