Crude Oil Ends Higher After Fed Meet, Weak Dollar

(RTTNews) - U.S. crude oil climbed to end at a one-week high on Thursday, as the dollar weakened against a select band of currencies after the Federal Reserve refrained from providing any specific time for raising interest rates.

The uptick in oil prices come despite data from the U.S. Energy Information Administration showed crude oil stocks at the Cushing, Oklahoma hub to have risen for the first time since April.

The dollar trended lower in the aftermath of the Fed announcement that hinted at a gradual increase in rates. The interest-rate hike is indicated be much slower than anticipated, even as the Fed remained apprehensive over the pace inflation rates are rising to the desired level.

The Fed maintained its benchmark interest rate unchanged near zero, while not providing any specific guidance regarding its first rate hike. But the central bank's forecast reinforced the view that the eventual increase in rates will be gradual. The Fed also indicated the improving U.S. economic growth would likely see one or two rate hikes during the year.

Concerns over Greece also continued to weigh on investors after a meeting of eurozone finance ministers earlier today ended in a stalemate without any agreement over Athens financial mess. Meanwhile, reports say the European Council President Donald Tusk has since called an emergency summit meeting of eurozone leaders on Monday to discuss the Greek crisis.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, gained $0.53 or 0.9 percent, to settle at $60.45 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for July delivery scaled a high of $60.89 a barrel intraday and a low of $59.25.

On Wednesday, crude oil slipped $0.05 to settle at $59.92 a barrel, after a weekly oil report from the U.S. Energy Information Administration showed stocks at Cushing in Oklahoma rose more than expected, even as crude oil stockpiles dropped more than anticipated last week.

An EIA report yesterday showed U.S. crude oil inventories dropped 2.7 million barrels in the week ended June 12, while analysts expected stocks to decline 2.4 million barrels, with total crude oil inventories at 467.9 million. This is the seventh straight week of decline for crude oil inventories.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.02 on Thursday, down from its previous close of 94.28 on Wednesday in late North American trade. The dollar scaled a high of 94.23 intraday and a low of 93.56.

The euro trended higher against the dollar at $1.1378 on Thursday, as compared to its previous close of $1.1338 in North American trade late Wednesday. The euro scaled a high of $1.1437 intraday and a low of $1.1331.

On the economic front, a Labor Department report on Thursday showed a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended June 13, in yet another upbeat sign for the U.S. labor market. The initial jobless claims fell to 267,000, a decline of 12,000 from the previous week's unrevised level of 279,000. Economists expected jobless claims to dip to 275,000.

Meanwhile, a Commerce Department report on Thursday showed consumer prices in the U.S. rose slightly less than economists had expected in May, notwithstanding a substantial increase in energy prices. The consumer price index climbed 0.4 percent in May after inching up by 0.1 percent in April, reflecting the largest monthly gain since February of 2013. However, it was still smaller than the 0.5 percent increase expected by economists.

Manufacturing conditions in the Philadelphia region have improved in June, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday. The Philly Fed said its diffusion index of current activity jumped to 15.2 in June from 6.7 in May, with a positive reading indicating growth in regional manufacturing activity. Economists expected the index to inch up to 8.0.

Eurozone's labor costs rose sharply in the first quarter at the fastest pace in more than three years, data from Eurostat revealed Thursday. Hourly labor costs grew 2.2 percent annually in the three months to January, following a 1.2 percent increase in the previous quarter. It was the fastest rate of growth since the second quarter of 2011 when costs rose 2.5 percent.

U.K. retail sales increased unexpectedly in May as low inflation and strong pay growth underpinned consumer spending. Retail sales including auto fuel rose 0.2 percent in May from April when it climbed 0.9 percent, data from the Office for National Statistics showed Thursday. Although the monthly growth eased from April, this was the second consecutive rise and came in contrast to a 0.1 percent fall forecast by economists.