U.S. crude oil extended loses to settle at a six-month low Wednesday, after a weekly oil report from the Energy Information Administration showed U.S. crude stockpiles to have increased more than expected last week.
The weekly Energy Information Administration oil report showed U.S. crude oil inventories to have increased more than expected by 8.50 million barrels for the week ended September 14. Analysts expected crude oil inventories to increase by 2.50 million barrels for the week. Meanwhile, gasoline stocks dropped 1.40 million barrels for the week, while analysts expected an increase of 1 million barrels last week.
Earlier in the day, oil prices were boosted by news of fresh stimulus measures from the Bank of Japan, but thereafter slid sharply. This fueled speculations that the official inventories data may have been leaked before the scheduled release. The EIA has, however, dispelled any such possibility of leak before the scheduled 10:30 a.m. ET release.
Light Sweet Crude Oil futures for October delivery plunged $3.31 or 3.5 percent to close at $91.98 a barrel on the New York Mercantile Exchange Wednesday.
Crude prices scaled a high of $96.17 a barrel intraday and a low of $91.25.
Yesterday, oil prices dropped mainly on demand growth concerns with Saudi Arabia indicating it would maintain production of about 10 million barrels.
The euro traded higher against the dollar at $1.3053 on Tuesday, as compared to $1.3048 late Tuesday in North America. The euro scaled a high of $1.3085 intraday and a low of $1.2994.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.10 on Wednesday, down from 79.19 in North American trade late Tuesday. The dollar scaled a high of 79.40 intraday and a low of 79.00.
The Bank of Japan on Wednesday announced a fresh round of stimulus to revive the economy by expanding the asset purchase by another JPY 10 trillion or about $126.7 billion. The central bank also cut its assessment of the economy, saying the recovery is "pausing," while leaving its interest rate target unchanged between zero and 0.1 percent. Bank of Japan lifted the total size of its asset purchase program to JPY 80 trillion following an additional JPY 5 trillion purchase authorization each for Japanese government bonds and treasury discount bills.
The decision that came close on the heels of Federal Reserve's announcement of a third round of quantitative easing was passed unanimously by the Monetary Policy Board. The asset purchase target now stands at JPY 55 trillion, up from JPY 45 trillion previously. The credit facility was unchanged at JPY 25 trillion.
In economic news from the U.S., existing home sales jumped to a two-year high in August, a report by the National Association of Realtors on Wednesday showed. Existing home sales climbed 7.8 percent to an annual rate of 4.82 million in August from 4.47 million in July. Sales rose more than economists anticipated to an annual rate of 4.55 million. Existing home sales in August were up 9.3 percent from 4.41 million in the same month a year ago, at their highest since May 2010.
New housing construction in the U.S. rebounded in August from an unexpectedly large drop in July, but was below economists' expectations. The Commerce Department's report showed new privately-owned housing starts came in at a seasonally adjusted annual rate of 750,000, a 2.3 percent increase from revised July levels.
Nonetheless, the rate of new construction came in notably below the 768,000 rate predicted by most economists. New building permits, a leading indicator for housing starts, fell modestly in August, dropping to a seasonally adjusted annual rate of 803,000. This is 1.0 percent below the revised July rate of 811,000.
Elsewhere, foreign direct investment into China declined 1.4 percent in August to $8.33 billion from a year ago, as investors remained wary about the country's future growth prospects amid weak inflows from the debt-trapped European Union. China drew $74.99 billion in foreign direct investment during the January to August period, which was down by 3.4 percent from last year. Meanwhile, outbound investment surged about 39 percent to $47.7 billion.
by RTT Staff Writer
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