U.S. crude oil futures plunged to an eight-month low Thursday, amid concerns over the outcome of the European Union summit meeting that is underway, a strong U.S. dollar and as well on a decline is U.S. equity markets. This was the lowest oil prices had slipped since October 2011. The EU summit meet underway in Brussels is unlikely to offer any new solution to the eurozone debt problems, which could send investors flocking to the safety of the U.S. dollar.
Light Sweet Crude Oil futures for August delivery, dropped $2.52 or 3.1 percent to close at $78.69 a barrel on the New York Mercantile Exchange Thursday.
Crude prices scaled a high of $80.84 a barrel intraday and a low of $77.64.
Yesterday, oil settled above the $80-mark for the first time in five sessions on some positive economic data and an Energy Information Administration report that showed U.S. oil stockpiles declined, although lesser than expected. Investors continued to focus on the upcoming European Union summit meeting, with little hopes for a positive outcome.
The dollar index, which tracks the U.S. unit against six major currencies, was trading at 82.806 on Thursday, up from 82.585 in North American trade late Wednesday. The dollar scaled a high of 82.83 intraday and a low of 82.24.
The euro traded lower against the dollar at $1.2421 on Thursday, as compared to $1.2468 late Wednesday in North America. The euro scaled a high of $1.2524 intraday and a low of 1.2408.
In economic news, the U.S. Commerce Department said the nation's GDP increased at an annual rate of 1.9 percent in the first quarter compared to the 3.0 percent growth seen in the fourth quarter. The unrevised pace of growth came in line with the expectations of economists.
Meanwhile, new claims for unemployment fell somewhat for the week but nevertheless remained slightly higher than predicted, according to the U.S. Labor Department. The level of initial unemployment claims were at a seasonally adjusted level of 386,000 for the week ending June 23, a decrease of 6,000 from the previous week's revised level of 392,000. Most economists expected a somewhat lower level of 385,000 new claims.
From the eurozone, unemployment in Germany increased more than expected in June, reports said citing data from the labor ministry. Unemployment rose by 7,000 in June from a month earlier compared to expectations for an increase of 3,000. The unemployment rate rose to 6.8 percent from 6.7 percent in May, while expectations were for a steady rate.
Meanwhile, eurozone economic confidence declined less than economists expected in June, survey results from European Commission showed. The economic confidence index fell to 89.9 in June from 90.5, but remains above the consensus forecast of 89.6. Falling confidence in industry, services and, to a lesser extent, among consumers was counterbalanced by improving confidence in retail trade and construction.
by RTT Staff Writer
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