Higher demand forecast from the International Energy Agency lifts prices
Crude oil futures climbed nearly 6% on Wednesday, 15 April 2015 as a smaller-than-expected weekly increase in U.S. crude supplies and a higher demand forecast from the International Energy Agency lifted prices to their highest settlement level of the year.
On the New York Mercantile Exchange, May crude jumped $3.10, or 5.8%, to settle at $56.39 a barrel.
As per the latest EIA report, the EIA on Wednesday reported that crude inventories climbed by 1.3 million barrels for the week ended 10 April 2015. That was smaller than the 3.5 million barrels forecast. The EIA also said gasoline supplies were down by 2.1 million barrels, while distillate stockpiles rose two million barrels last week. Market was looking for a decline of 900,000 barrels for gasoline supplies and a fall of 150,000 for distillates, which include heating oil.
U.S. data released Wednesday showed that industrial production in March fell by a seasonally adjusted 0.6% — down a bit more than expected and the largest decline since August 2012. The Empire State manufacturing index in April fell to negative 1.2 — the lowest since December.
Against that backdrop, the ICE U.S. dollar index traded lower, helping to lift demand for dollar-denominated gold.
Recent uneven U.S. economic data falls into the camp favoring a U.S. interest rate rise later rather than sooner. Still, many believe the Federal Reserve will make its move to raise interest rates in June. Economic reports the next six weeks could well tip the Fed's hand on when it will make its rate-hike move. Traders were awaiting the Federal Reserve's beige book, due out Wednesday afternoon.
In overnight news, China's first-quarter gross domestic product was reported at up 7.0%, year-on-year, for the slowest rate of growth in six years. The figure was in line with market expectations. Asian stock markets sold off on the China news. The slowing rate of economic growth in China is leading to growing notions that China's central bank will continue to stimulate its monetary policy. However, the specter of forthcoming monetary policy stimulus by China's central bank means better demand for commodities is on the horizon.
The German government auctioned 10-year bonds on Wednesday and they fetched an average yield of 0.13%, which is a record low and suggests there is still flagging confidence in the European Union economy and financial system.
Among other energy products, May gasoline surged 10 cents, or 5.5%, to $1.936 a gallon and May heating oil added 8.7 cents, or 4.8%, to $1.889 a gallon.
In a separate monthly report issued Wednesday, the International Energy Agency upwardly revised its oil demand growth estimate for 2015 by 90,000 barrels a day to 93.6 million barrels a day.
May natural gas ended at $2.61 per million British thermal units, up 8 cents, or 3.2%, ahead of Thursday's weekly U.S. government report on supplies.
