Crude Oil Ends Above $107 On Supply Concerns

(RTTNews) - U.S. crude oil ended at a two-week high for a fifth straight session Thursday, on concerns over supply disruption from the Middle East with the Suez Canal skirting a tense Egypt as violence continued to escalate. Notwithstanding some weak manufacturing data out of the U.S., investors continued to weigh the more-than-expected drop in oil inventories last week as indicated by the official data from the Energy Information Administration.

Egypt continued to witness violence with supporters of deposed Islamist president Mohamed Morsi determined to take on security forces, even as more than 500 lives were lost in the turmoil. Although not a major oil producer, the situation in Egypt has caused great anxiety with fears over shipment disruption through the Suez Canal, the major shipping route from the Middle-East.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, gained $0.48 or 0.5 percent to close at $107.33 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for September delivery scaled a high of $107.87 a barrel intraday and a low of $106.60.

Yesterday, oil extended gains for a fourth session after an official weekly report from the Energy Information Administration showed U.S. crude stockpiles to have declined more than expected last week. Oil had been trading lower for much of the day, but pared losses towards the close.

The EIA on Wednesday said U.S. crude oil inventories declined 2.8 million barrels, while gasoline stocks dropped 1.2 million barrels in the week ended August 9. Analysts expected crude oil inventories to dip 1.5 million barrels and gasoline stocks to shed 2 million barrels last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.23 on Thursday, down from 81.71 late Wednesday in North American trade. The dollar scaled a high of 81.94 intraday and a low of 81.16.

The euro traded higher against the dollar at $1.3336 on Thursday, as compared to $1.3256 late Wednesday in North America. The euro scaled a high of $1.3354 intraday and a low of $1.3206.

In economic news from the U.S., the Labor Department said initial jobless claims fell to 320,000, a decrease of 15,000 from the previous week's revised figure of 335,000. Economists had expected jobless claims to edge down to 330,000 from the 333,000 originally reported for the previous week. With the bigger than expected decrease, the claims fell to its lowest level since hitting 316,000 in the week ended October 6, 2007.

Homebuilder confidence in the U.S. has unexpectedly improved in August with the index rising to its highest level in nearly eight years. The NAHB/Wells Fargo Housing Market Index rose to 59 in August from a downwardly revised 56 in July. Economists expected the index to decline to 56 from the 57 originally reported for the previous month. The housing market index rose for the fourth consecutive month, reaching its highest level since hitting 61 in November 2005.

In a separate report, the Labor Department said its consumer price index rose by 0.2 percent in July following a 0.5 percent increase in June. The modest increase in prices matched economist estimates. The core consumer price index, which excludes food and energy prices, also edged up by 0.2 percent. The core price growth matched the increases seen in the two previous months as well as expectations.

Meanwhile, the Federal Reserve Bank of New York said its general business conditions index dipped to 8.2 in August from 9.5 in July. A positive reading indicates growth in regional manufacturing activity, but economists had expected the index to climb to a reading of 10.0.

A Federal Reserve Bank of Philadelphia report on Thursday showed manufacturing activity expanded at a much slower than expected rate in August, after having reported a significant improvement in regional manufacturing activity in the previous month,

The Philly Fed's diffusion index of current activity dropped to 9.3 in August from 19.8 in July. While a positive reading indicates continued growth in regional manufacturing activity, economists had expected a more modest decrease to a reading of 15.0. The steep drop came after having reached its highest level since March 2011 in the previous month.

Elsewhere, U.K. retail sales growth accelerated more than expected in July reflecting robust food store sales, data showed. Including automotive fuel, retail sales advanced 1.1 percent from prior month, following a 0.2 percent rise in June, the Office for National Statistics said. The rate of growth was expected to rise moderately to 0.7 percent.