EIA report shows increase in inventories was slightly below expectations
Crude-oil futures rose on Wednesday, 29 October 2014 at Nymex getting a boost from a supply report that showed an increase in inventories was slightly below Wall Street expectations. Upbeat signals from the Federal Reserve about the U.S. economy also lifted oil.
Both Brent and New York-traded crude have been up for two straight sessions. Crude futures advanced further after the EIA report, although gains moderated by the end of session.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December rose 78 cents, or 1%, to settle at $82.20 a barrel.
On Wednesday, the Energy Information Administration said U.S. crude-oil inventories increased by 2.1 million barrels, in the week ending 24 October 2014. Market had forecast a larger increase of 2.8 million barrels. Supplies of gasoline declined by 1.2 million, and distillates supplies decreased by 5.3 million. That contrasted with expectations of a decline of 350,000 barrels for gasoline supplies, and a decline by 950,000 barrels for distillates supplies.
The Federal Open Market Committee (FOMC) minutes hint the U.S. central bank could move to raise interest rates sometime in 2015, based upon the committee's somewhat surprising upbeat assessment of the U.S. economy. The market place was leaning in the direction of an FOMC statement that favored the dovish camp—even though the Fed did end its monthly bond-buying program (quantitative easing) as most expected it would. While the U.S. dollar index surged higher, the Euro currency slumped on the FOMC statement, as it implied divergent paths on which the Federal Reserve and European Central Bank are set to travel.
In overnight news, the German government auctioned a 10-year bund on Wednesday and it fetched a record low average yield of 0.87%. Demand was so-so but the record low yield suggests European investors are still bearish on the European Union's economic and financial conditions. Germany is the strongest EU economy and its government debt is considered the safest in the EU.
In other news, the International Monetary Fund reported that several world central banks continued to stock up on gold bullion in September. Russia, Azerbaijan and Kazakhstan all raised their gold holdings. Russia led the way by adding 1.2 million ounces last month.
Offering a more downbeat view on oil, Barclays cut its oil-price forecasts. It has lowered its oil-price forecast for the first half of 2015 by around $6 and expects Brent at $88 a barrel and Nymex WTI at $78 a barrel in the first quarter. Barclays's decision to cut its oil forecast follows a similar move by Goldman Sachs on Monday.
Among other energy products, gasoline for November delivery gained 2.46 cents, or 1.1%, to settle at $2.2207 a gallon on Nymex. November heating oil advanced 4.19 cents, or 1.7%, to finish at $2.5350 a gallon also on Nymex.
November natural gas rose 7.90 cents, or 2.2%, to end at $3.7280 per million British thermal units on Nymex.
