The price of crude oil was extending losses Wednesday morning as traders await official data on the US crude oil inventories, due out later during the session.
In an interesting development, a group of oil companies are being investigated by the European Commission over allegations of price-fixing. The commission said a series of surprise inspections were carried out on oil companies, including BP, Shell and Statoil.
Light Sweet Crude Oil (WTI) futures for June delivery, shed $0.83 to $93.38 a barrel. Yesterday, oil lost over 1 percent mostly on demand growth concerns and with the dollar strengthening against some major currencies. A strong dollar limits buying in dollar-priced commodities as it makes them costlier to holders of other currencies.
Tuesday after the market hours, the API said US crude oil inventories gained 1.1 million barrels, while gasoline stocks shed 480,000 barrels in the weekended May 10.
This morning, the U.S. dollar moved up near its 6-week high versus the euro and hovering near its 3-week high against sterling. The buck was extending its 4-year high versus the yen, while trading around its 10-month high against the Swiss franc.
In economic news, euro zone economy contracted more than expected by economists in the first quarter of 2013, preliminary data from Eurostat showed. The gross domestic product fell 0.2 percent quarter-on-quarter in the first quarter, faster than the expected 0.1 percent contraction. This followed a 0.6 percent decline in the fourth quarter of 2012.
Meanwhile, German economy narrowly escaped recession in the first quarter of 2013, but the growth was weaker than forecast. Germany's gross domestic product grew 0.1 percent quarter-on-quarter in the first quarter, after adjustment for price, seasonal and calendar variations. This was weaker than the 0.3 percent growth forecast by economists.
Elsewhere, the Bank of England lifted its estimate for economic growth and forecast inflation to return to its 2 percent target earlier than projected. The BoE forecast economic growth to accelerate to 0.5 percent in the second quarter from 0.3 percent in first quarter of 2013.
Traders will look to the producer price inflation report for April from the US Labor Department, due out at at 8:30 am ET. Economists expect producer prices to have declined by 0.7 percent from the previous month, while core producer price inflation is expected at 0.2 percent.
Simultaneously, the New York Federal Reserve will release the results of its manufacturing survey for May. The consensus expectations call for an increase in the general business conditions index for May to 3.75 from 3.05 in April.
Today during trading hours, the EIA will release its US crude oil inventories report for the weekended May 10. Analysts expect crude oil inventories to climb 450,000 barrels and gasoline stocks to shed 1.1 million barrels last week.
For comments and feedback: editorial@rttnews.com