U.S. crude oil futures plunged to close at a 7-week low Wednesday, on demand growth concerns after data from the Energy Information Administration revealed a huge increase in U.S. crude stockpiles, more than four times what analysts expected.
Meanwhile, the dollar gained in strength following some weak Spanish bonds auction earlier today and ECB Chief's comments that it was too premature to withdraw its current monetary policy.
Light Sweet Crude Oil futures for May delivery, dropped $2.54 or 2.4 percent to close at $101.47 a barrel on the New York Mercantile Exchange Wednesday.
Crude prices scaled a high of $104.12 a barrel intraday and a low of $101.08.
Data from the EIA showed US crude oil inventories surged by 9.00 million barrels, while gasoline stocks dipped 1.50 million barrels in the week ended March 30. Analysts expected crude oil inventories to gain 2.20 million barrels, while gasoline stocks are seen dipping 1.40 million barrels last week.
Meanwhile, European Central Bank President Mario Draghi indicated inflation as a risk to growth and its efforts with liquidity operations to stabilize the banking system, are temporary. Draghi stressed that eurozone governments should ensure sound structural reforms and fiscal positions, very crucial to economic growth.
The dollar made gains against the euro after some lukewarm response to a Spanish bond auction, which once again brought back focus on the sovereign debt problems in Europe.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.830 on Wednesday, up from 79.410 in North American trade late Tuesday. The dollar scaled a high of 79.92 intraday, with a low of 79.39.
The euro was trading lower against the dollar at $1.3129 on Wednesday, as compared to $1.3231 late Tuesday. The euro had scaled a high of $1.3239 intraday with a low of $1.3108.
In economic news from the U.S., the ADP said employment increased by 209,000 jobs in February following an upwardly revised increase of 230,000 jobs in February. Economists had expected an increase of about 208,000 jobs compared to the addition of 216,000 jobs originally reported for the previous month.
Elsewhere, the European Central Bank left its key interest rate unchanged at 0.25 percent for a fourth month in a row in April, as widely expected. The central bank had reduced the rate in November and December, reversing the two hikes undertaken earlier last year.
Eurozone retail sales declined in February, but at a slower-than-expected pace, data from Eurostat showed. Retail sales fell 0.1 percent month-on-month in February, following a 1.1 percent rise in January. Economists were expecting sales to dip 0.2 percent.
Meanwhile, Germany's factory orders grew 0.3 percent month-on-month in February, reversing January's 1.8 percent decline, the Federal Ministry of Economy and Technology showed. The expansion was much smaller than the 1.5 percent consensus forecast. On a yearly basis, industrial orders fell by adjusted 6.1 percent, following a 6 percent drop in the previous month. Economists were expecting 5.5 percent decrease.
by RTT Staff Writer
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