U.S. crude oil settled higher Tuesday, ahead of the weekly crude oil inventories report and on supply concerns stemming from the geopolitical tensions in the Middle East as violence continued unabated in Syria. Investors also viewed the possible outcome of the two-day U.S. Federal Reserve policy meet with anxiety, on speculations whether or not the central bank would go ahead with plans to taper its quantitative easing program.
Even as the U.S. indicated it would increase aid to Syrian rebels, concerns on the level of violence in the beleaguered country continued with fears it would spread to other oil producing regions of the Middle East. While Russian President Vladimir Putin has hardened his stand on arming Syrian rebels and clashed with leaders of the Group of Eight at their summit meeting in Northern Ireland, no consensus could be reached on the way forward to the end the Syrian crisis.
Nevertheless, investors mulled over some mixed economic news with consumer prices in the U.S. inching up in May, albeit less than expected. Meanwhile, new residential construction in the U.S. showed a significant rebound in May, but were still below economists' estimates.
Investors were also focused on the crude oil inventories data from the American Petroleum Institute later today and the Energy Information Administration weekly oil report on Wednesday.
Light Sweet Crude Oil futures for July delivery, the most actively traded contract, gained $0.67 or 0.7 percent to close at $98.44 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices for July delivery scaled a high of $98.61 a barrel intraday and a low of $97.41.
Yesterday, crude oil settled lower after having trended higher for most of the day amid supply concerns, with some news reports on the Federal Reserve likely to cut back on its quantitative easing program.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.62 on Tuesday, down from 80.65 late Monday in North American trade. The dollar scaled a high of 80.99 intraday and a low of 80.56.
The euro traded higher against the dollar at $1.3405 on Tuesday, as compared to $1.3366 late Monday in North America. The euro scaled a high of $1.3415 intraday and a low of $1.3326.
In economic news from the U.S., new residential construction in the U.S. showed a significant rebound in the month of May, but housing starts still came in well below economists' estimates, a Commerce Department report said Tuesday.
Housing starts in May climbed 6.8 percent to a seasonally adjusted annual rate of 914,000 from the revised April estimate of 856,000. The increase follows a 14.8 percent drop in the previous month. Economists expected housing starts to surge up to an annual rate of 955,000 compared to the 853,000 originally reported for April.
Meanwhile, building permits, an indicator of future housing demand, fell 3.1 percent to an annual rate of 974,000 in May from the revised April rate of 1.005 million. The drop, which followed a 12.9 percent jump in April, were roughly in line with expectations.
Consumer prices in the U.S. increased modestly in May, after having reported decreases in each of the two previous months, a Labor Department report showed Tuesday. The consumer price index for May inched up by 0.1 percent after falling by 0.4 percent in April and dipping by 0.2 percent in March. Economists anticipated the index to edge up by 0.2 percent.
From the eurozone, Germany's investor confidence rose more-than-expected in June after remaining broadly unchanged in the previous month, signaling prospects of a further pick up in recovery that began early this year. Data from the Centre for European Economic Research/ZEW showed the Indicator of Economic Sentiment climbed to a three-month high of 38.5 from 36.4 in May. Economists had forecast a more modest rise to 38.1.
Elsewhere in Europe, consumer price inflation in the U.K. rose more than expected in May, driven largely by the previous month's steep increase in air-fares, smaller decrease in fuel costs and a rise in clothing prices, a report from the Office for National Statistics showed Tuesday. The rate of inflation rose to 2.7 percent in May from 2.4 percent in April. Economists expected an increase to 2.6 percent.
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