Crude Oil Ends Below $91 As Dollar Strengthens

(RTTNews) - U.S. crude oil shed much of the gains to end lower for a second straight session on Wednesday, after the dollar continued to strengthen on some upbeat private jobs data from the U.S., notwithstanding some disappointing U.S. manufacturing data.

Oil trended higher for much of the day, with prices rising as much as two percent after an official weekly oil report showed U.S. stockpiles to have declined more than expected last week.

Nevertheless, investors continued to fret over a supply glut after news reports yesterday indicated the Organization of the Petroleum Exporting Countries with increased crude production in September and Libyan production at its highest level in over a year.

Earlier today, a report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have dropped 1.4 million barrels in the week ended September 26, while analysts anticipated an increase of 0.7 million barrels. The EIA report showed U.S. crude oil inventories at 356.6 million barrels, end last week.

Gasoline stocks dropped 1.8 million barrels last week, with analysts anticipating a decrease of 0.8 million barrels. Inventories of distillate, including heating fuel, declined 2.9 million barrels last week.

A report from the American Petroleum Institute late Tuesday, showed U.S. crude stockpiles to have unexpectedly declined by 0.5 million barrels last week.

In some positive economic news, a report from payroll processor ADP that showed employment in the U.S. private sector to have increased more than expected in September

Nevertheless, the Institute of Supply Management said growth in U.S. manufacturing activity slowed down notably in September, with the index of activity in the sector pulling back off a three-year high.

Investors also continued to closely monitor the situation in Syria, where reports say nearly 20 people, most of them children, have been killed as explosions rocked the central city of Homs.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, dropped $0.43 or 0.5 percent to close at $90.73 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for November delivery scaled a high of $92.96 a barrel intraday and a low of $90.47.

On Tuesday, crude oil futures plunged 3.6 percent, to close at its lowest close since November 2012. Some soft economic data out of the U.S., including a report showing an unexpected drop in consumer confidence in September, data showing a slower pace of growth in Chicago-area manufacturing activity and worries about an economic slowdown in China dragged down oil prices.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 86.00 on Wednesday, up from its previous close of 85.93 late Tuesday in North American trade. The dollar scaled a high of 86.18 intraday and a low of 85.78.

The euro trended lower against the dollar at $1.2613 on Wednesday, as compared to its previous close of $1.2631 late Tuesday in North American trade. The euro scaled a high of $1.2640 intraday and a low of $1.2584.

In economic news from the U.S., a report from payroll processor ADP showed employment in the U.S. private sector to have increased more than expected in September, rising by 213,000 jobs, following a downwardly revised increase of 202,000 jobs in August.

A report from the Institute of Supply Management showed growth in U.S. manufacturing activity to have slowed down notably in September, with the index of activity in the sector pulling back off a three-year high, dropping to 56.6 from a score of 59.0 in August. Economists expected the index to edge down to 58.5.

Separately, a Commerce Department report revealed U.S. construction spending dropping unexpectedly in August, declining 0.8 percent to a seasonally adjusted annual rate of $961.0 billion from the revised July estimate of $968.8 billion. Economists expected spending to increase by about 0.5 percent.

In economic news from the eurozone, a report from Markit Economics showed manufacturing in the area move closer to stagnation in September, falling to 50.3 from a score of 50.7 in August, as German factory sector contracted for the first time in 15 months.

U.K. labor productivity remained flat in the second quarter despite faster economic growth, data from the Office for National Statistics showed Wednesday. Labor productivity as measured by output per hour was unchanged in the second quarter from the previous quarter, but was 0.3 percent lower than a year ago. However, productivity per worker increased 0.4 percent from last quarter.

The European Central Bank will come out with its monetary policy on Thursday, with the central bank widely expected to announce measures to spur growth.