The price of crude oil was moving lower Thursday morning after official data revealed inventory build up. However during the session, prices might find support as the Federal Open Market Committee raised its outlook on the U.S. economic recovery.
Light Sweet Crude Oil (WTI) futures for August delivery, the most actively traded contract, lost $1.85 to $96.39 a barrel. Yesterday, oil settled lower after the Energy Information Administration's weekly oil report showed a better-than-expected increase in U.S. crude stockpiles last week. The decline in prices comes despite some upbeat economic outlook from Federal Reserve with the central bank announcing the continuation of its quantitative easing program unchanged.
Wednesday during trading hours, the EIA said U.S. commercial crude oil inventories increased 0.3 million barrels to 394.1 million barrels for the week ended June 14. This is above the upper limit of the average range for this time of year. Analysts expected crude oil inventories to decline by 1 million barrels.
This morning the U.S. dollar advanced toward a 2-week high versus the euro and sterling, while extending gains versus the yen and the Swiss franc.
In economic news, euro zone business activity logged the smallest downturn since March last year, flash survey data from Markit Economics showed. The composite output index improved to 48.9 in June from 47.7 in May. The reading also exceeded consensus forecast of 48.1. Nonetheless, the sub-50 reading nevertheless rounded off another weak quarter.
Meanwhile, the Swiss National Bank decided to retain the currency ceiling at CHF 1.2 per euro and said it stands ready to enforce the franc cap, if necessary, by buying foreign currency in unlimited quantities. The target range for the three-month Libor was left unchanged at 0.0-0.25 percent. The decision was in line with economists' forecast.
German producer price inflation rose less than expected in May, data from the Federal Statistical Office showed. The producer price index rose 0.2 percent year-on-year in May, faster than a 0.1 percent increase in the previous month. Economists had forecast an increase of 0.3 percent.
Germany's manufacturing activity declined at a faster rate in June, defying economists' expectations that the downturn would ease, latest data showed. The seasonally adjusted purchasing managers' index for the manufacturing sector dropped to a two-month low of 48.7 in June from 49.4 in May, data from a survey by Markit Economics and BME revealed. Economists had forecast the index to rise to 49.9.
From the U.S., the Labor Department is scheduled to release its jobless claims report for the week ended June 15th at 8:30 am ET. Economists expect claims to rise to 340,000 from 334,000 in the week ended June 8.
Later during the session, the National Association of Realtors will release its existing home sales report. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 5 million units for May compared to a 4.97 million-unit rate for April.
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