Crude Oil Ends Higher As U.S. Fiscal Crisis Ends

(RTTNews) - U.S. crude oil surged to end sharply higher Wednesday, tracking rising equity markets after the Senate announced reaching an agreement to end the more than two-week federal government shutdown and raise the U.S. debt ceiling limit to avert a default.

The agreement will enable funding the government through January 15 and extend the debt limit through February 7. The plan also calls for lawmakers to work toward a broader budget agreement by December 13 and includes stricter income verification for subsidies under Obamacare.

As a result of the ongoing crisis in Washington, with just a day to the debt ceiling deadline, Fitch Ratings put the U.S. Treasury on Ratings Watch Negative, considered a first step to a downgrade. Nonetheless, investors largely ignored a report from the National Association of Home Builders which showed an unexpected drop in homebuilder confidence.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, jumped $1.08 or 1.2 percent to close at $102.29 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for November delivery scaled a high of $102.97 a barrel intraday and a low of $100.75.

Yesterday, oil settled lower as the dollar turned higher against some major currencies amid signs the White House and Congress are nearing an agreement to end the federal government shutdown and raise the U.S. debt ceiling to avert a default. Investors also closely monitored the talks between Iran and other major powers that could possibly ease sanctions against the Middle-East nation.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.48 on Wednesday, up from 80.45 late Tuesday in North American trade. The dollar scaled a high of 80.75 intraday and a low of 80.28.

The euro traded higher against the dollar at $1.3535 on Wednesday, as compared to its previous close of $1.3524 late Tuesday in North America. The euro scaled a high of $1.3567 intraday and a low of $1.3474.

In economic news, homebuilder confidence in the U.S. unexpectedly decreased in October, a report from the National Association of Home Builders showed Wednesday. The NAHB/Wells Fargo Housing Market Index dropped to 55 in October from a downwardly revised 57 in September. Economists expected the index to come in unchanged, compared to the 58 originally reported for the previous month.

Eurozone inflation slowed to 1.1 percent in September as initially estimated from 1.3 percent in August, final data from Eurostat showed. Inflation has remained below the European Central Bank's 2 percent ceiling.

Meanwhile, eurozone foreign trade surplus fell more than expected in August, the latest data from the statistical office Eurostat showed. The region's goods trade with the rest of the world resulted in a surplus of EUR 7.1 billion in August, down from a EUR 18 billion surplus in July. This was forecast to fall to EUR 10 billion. A year earlier, the surplus amounted to EUR 4.6 billion.

Elsewhere, the number of people claiming job-seeker's allowance plunged more than expected in September to the lowest since January 2009, data showed. Jobless claims declined 41,700 to 1.35 million, which was the lowest figure since January 2009, the Office for National Statistics reported. The decrease was sharper than the consensus of 25,000 drop. From September 2012, claims fell by 214,500.

Britain's jobless claims declined the most since 1997 in September as the strong economic recovery generated more jobs, adding to hopes of a faster-than-expected improvement in the labor market. The claimant count declined by 41,700 to 1.35 million in September, the lowest since January 2009, a report from the Office for National Statistics showed. The monthly fall was the sharpest since June 1997, exceeding the consensus for a 25,000 decline.

Later today, the American Petroleum Institute will release its U.S. crude oil inventories report for the week ended October 11. Analysts project U.S. oil inventories to have increased by 1.7 million barrels and gasoline stockpiles expected to drop by 100,000 barrels in the week before.

Due to the government shutdown, the Energy Information Administration is not likely to release its weekly crude oil inventory report.