U.S. crude oil futures settled lower Tuesday, amid concerns over demand growth after Saudi Arabia assured enough supplies to stabilize the market while China hiked retail oil prices fueling worries of a economic slowdown.
Supply concerns eased after Saudi Arabia, the world's largest oil exporter, said Monday it would ensure adequate global supplies of crude oil to stabilize the market and prices.
Concerns over the Chinese economy slowing down resurfaced after China earlier today, raised retail gasoline and diesel prices for a second time this year, between 6 percent and 7 percent. This was the biggest increase in nearly 3 years.
Commodities were impacted when BHP's iron ore division president Ian Ashby, talking to the press in Perth, said the company sees a flattening of iron ore demand from China and that demand growth would drop to single digits. With indications of an economic slowdown in China, mining stocks plummeted globally.
Light Sweet Crude Oil futures for April delivery, which expires today, dropped $2.48 or 2.3 percent to close at $105.61 a barrel on the New York Mercantile Exchange on Tuesday. Crude prices scaled a high of $107.91 a barrel intraday and a low of $105.35.
Yesterday, oil ended higher near its two-week high mostly on a weak dollar and investor optimism of an economic recovery globally.
In currencies, the euro was trading lower against the dollar at $1.3229 on Tuesday, as compared to $1.3239 late Monday. The euro had scaled a high of $1.3252 intraday with a low of $1.3174.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.582 on Tuesday, up from 79.451 late Monday. The dollar scaled a high of 79.84 intraday, with a low of 79.43.
In economic news, new residential construction in the U.S. registered an unexpected decline in February, a Commerce Department report said Tuesday. Nonetheless, housing starts were almost in line with estimates due to an upward revision to the data for January.
The report showed that housing starts fell 1.1 percent to an annual rate of 698,000 in February from the revised January estimate of 706,000. Economists expected starts to edge up to 700,000 from the 699,000 that had been reported for the previous month. However, the revised figured for January reflects the highest level for starts since October of 2008.
New construction of buildings with five units or more, a considerably more volatile number than single-family starts, jumped 28.7 percent to 233,000.
Germany's producer price inflation eased for the fifth month to a 20-month low in February, data from the Federal Statistical Office showed. The producer price index increased 3.2 percent annually in February in line with economists' expectations, slower than the 3.4 percent rise in January.
Elsewhere, U.K. annual inflation slowed further in February to the lowest level since November 2010, data from the Office for National Statistics showed today. Consumer price annual inflation slowed to 3.4 percent in February from 3.6 percent in January. Nevertheless, the inflation figure remained slightly above the 3.3 percent forecast by economists.
Today after the market hours, the API will release its U.S. crude oil inventories report for the weekended March 16.
by RTT Staff Writer
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