Crude Oil Ends Below $108 On Syria

(RTTNews) - U.S. crude oil dropped sharply lower to end below $108 on Wednesday, ahead of the official crude inventories data with investors weighing the prospects of military action against Syria by the U.S. and its allies, which seem to be waning at the current time. Oil futures ended at its lowest level since August 26, after having dropped below $107 intraday.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, plunged $1.31 or 1.2 percent to close at $107.23 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for October delivery scaled a high of $108.61 a barrel intraday and a low of $106.77.

Yesterday, oil settled higher on the back of some upbeat manufacturing activity data out of the U.S. and China, lifting demand growth outlook prospects for oil. The developments over military action against Syria also contributed to the uptick in oil prices.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.16 on Wednesday, down from 82.38 late Tuesday in North American trade. The dollar scaled a high of 82.43 intraday and a low of 82.08.

The euro traded higher against the dollar at $1.3209 on Wednesday, as compared to its previous close of $1.3171 late Tuesday in North America. The euro scaled a high of $1.3220 intraday and a low of $1.3158.

In economic news from the U.S., the Commerce Department said the trade deficit for July widened to $39.1 billion compared to a revised $34.5 billion deficit in June. Economists expected the deficit to widen to $39.0 billion from the $34.2 billion originally reported for the previous month.

China's service sector business activity increased at the fastest rate in five months in August as new orders expanded strongly, a survey by HSBC and Markit Economics revealed Wednesday. The services business activity index rose to a five-month high of 52.8 in August from 51.3 in July. This followed a four-month period of relatively stagnant growth.

From the eurozone, activity in the German private sector increased for the fourth successive month in August final data from a survey conducted jointly by Markit Economics and BME showed. The seasonally adjusted composite output index, a measure of activity in the manufacturing sector and the service sector, rose to a seven-month high 53.5 in August from 52.1 in July. The preliminary estimates were for a score of 53.4.

Meanwhile, the eurozone private sector expanded at the fastest pace in just over two years, but the rate of growth was slightly weaker than initially estimated in August, final survey data from Markit Economics showed. The composite output index rose to 51.5 in August from 50.5 in July. The final reading was slightly below the flash estimate of 51.7.

A report from Eurostat revealed that retail sales in eurozone increased less than expected in July. Sales rose 0.1 percent in July from a month earlier compared with forecast for a 0.2 percent growth. This followed a 0.7 percent decline in June.

Elsewhere, service sector activity in the U.K. grew at the strongest pace in more than six-and-half years in August as incoming orders increased significantly, strengthening the recovery that started at the beginning of the year. The Markit/CIPS purchasing managers' index for the services sector climbed to 60.5 from 60.2 in July, contrary to economists' forecast for a decline to 59.7. The outcome of the survey, together with the stellar performance by the manufacturing sector and the construction sector, signals that the economy is on course to register a stronger growth in the September quarter.

Traders will look to the release of trade balance report for July from the US Commerce Department, due out at 8:30 a.m. ET. The consensus estimates call for a widening of the trade deficit to $39 billion from $34.2 billion for June.

Later today, the American Petroleum Institute will release its crude oil inventories report for the week ended August 30, while the Energy Information Administration will release its weekly oil report on Thursday.