U.S. inventories report showed a surprise drop in crude supplies
U.S. crude oil rose on Wednesday, 07 January 2014 at Nymex snapping a four-session losing streak after a dip below $47 a barrel earlier in the day. Earlier Wednesday, a weekly U.S. inventories report showed a surprise drop in crude supplies. The report, however, also showed bearish supply increases for gasoline and distillates, which include heating oil.
Light, sweet crude for February delivery rose 72 cents, or 1.5%, to settle at $48.65 a barrel on the New York Mercantile Exchange. The contract had traded as low as $46.83 earlier, extending a 4.2% drop on Tuesday that left crude oil at its lowest since April 2009.
The latest weekly inventory report showed that U.S. crude inventories declined by 3.1 million barrels in the week ended 02 January 2015. Market had expected supplies to increase by 380,000 barrels. Gasoline inventories rose by 8.1 million barrels, while supplies of distillates rose by 11.2 million barrels. Market had expected gasoline stocks to increase by 2.25 million barrels and distillate stocks to increase by 2.06 million barrels. It had earlier briefly dropped below the $50-a-barrel mark for the first time since May 2009.
The afternoon release of the minutes from the latest meeting of the Federal Reserve's Open Market Committee showed the members are considering an interest rate hike, but are worried about elements that could thwart the modest U.S. economic recovery. The market place deemed the FOMC minutes as a non-event.
The U.S. dollar index continues on its bullish rampage, hitting another 10-year high overnight as prices traded sharply higher on the day. The Euro currency slumped to a nine-year low versus the greenback on Wednesday.
In overnight news, consumer price inflation in the European Union fell by 0.2% in December, on an annual basis, which is the first decline on an annual basis since 2009. This news further advances notion the European Central Bank will implement quantitative easing of its monetary policy sooner rather than later. The ECB holds its next regular meeting on January 22.
Germany held a note auction (Schatz) on Wednesday that fetched a record low and average yield of negative .011%. Demand was termed strong. This news is another clue of the keener anxiety in the market place at present, regarding the overall financial and economic health of the European Union.
On the economic front, the ADP employment report served as an appetizer for Friday's nonfarm-payrolls report, while the trade-balance numbers for November were released 15 minutes later. Wednesday afternoon brought a look at the Federal Open Market Committee minutes from mid-December.
Among other energy products, gasoline for February declined 2 cents, or 1.2%, to settle at $1.3376 a gallon on Nymex. February heating oil dropped 3 cents, or 1.5%, to $1.6999 a gallon on Nymex.
Natural gas also for February retreated 7 cents, or 2.3%, to $2.8710 per million British thermal units – the lowest settlement for a front-month contract since September 2012.
The EIA is expected to release weekly natural gas inventories data on Thursday at 10:30 a.m. Eastern time. Market expects a decline in inventories between 117 billion cubic feet and 121 bcf for the week ending 02 January 2015.
