Crude Oil Ends Higher On Demand Growth Prospects

(RTTNews) - U.S. crude oil surged for a sixth straight session on Thursday, with investors mulling over the slowdown in U.S. production, even as the dollar trended lower against some major currencies. Rising tensions in the Middle East and the prospect of increased demand for crude also helped oil tick higher.

Nevertheless, the gains were somewhat limited after some disappointing economic data from the U.S. and on concerns over a potential Greek default on its international creditors and a possible exit from the eurozone.

Greece is in imminent danger of defaulting if bailout aid fund from international creditors are not made available, even as discussions over an extension remained inconclusive. Greek government bonds plummeted on Thursday, with yield on two-year debt rising above 27 percent.

Ratings agency S&P has downgraded Greece's credit rating again, indicating that it expects other financial commitments will be "unsustainable."

The Organization of the Petroleum Exporting Countries on Thursday said, demand for OPEC crude is expected to improve to about 29.3 million barrels a day in 2015. The group projected demand for non-OPEC supplies to drop by about 165,000 barrels a day, while anticipating an end to the U.S. supply boom end this year.

The Energy Information Administration this week indicated oil prices may stay below $80 per barrel through 2020. Subsequently, with US shale production expected to peak by that time, prices will also begin to decline.

In some disappointing economic news, weekly jobless claims for U.S. unemployment benefits increased unexpectedly, while housing starts and building permits both came in weaker than expected.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, gained $0.32 or 0.6 percent to settle at $56.71 a barrel on the New York Mercantile Exchange Thursday. This is the highest settlement for the year.

Crude prices for May delivery scaled a high of $57.42 a barrel intraday and a low of $55.07.

On Wednesday, crude oil soared $3.10 or 5.8 percent, to settle at $56.45 a barrel, after the official Energy Information Administration report showed crude stockpiles to have increased less than expected last week. Prices were also supported by a weak dollar, with the monthly oil-market report from the International Energy Agency revising upwardly its demand growth estimate for 2015.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.32 on Thursday, down from its previous close of 98.40 on Wednesday in late North American trade. The dollar scaled a high of 98.72 intraday and a low of 97.28.

The euro trended higher against the dollar at $1.0797 on Thursday, as compared to its previous close of $1.0684 in North American trade late Wednesday. The euro scaled a high of $1.0819 intraday and a low of $1.0626.

On the economic front, a Labor Department report on Thursday showed initial jobless claims for U.S. unemployment benefits to have unexpectedly increased in the week ended April 11. Initial jobless claims climbed to 294,000, an increase of 12,000 from the previous week's revised level of 282,000. Economists expected jobless claims to edge down to 280,000 from the 281,000 originally reported for the previous week.

A Commerce Department report showed a rebound in new U.S. residential construction in March, although housing starts still came in well below economists' estimates for the month. The report said housing starts rose 2.0 percent to an annual rate of 926,000 in March after tumbling 15.3 percent to a rate of 908,000 in February. Economists expected housing starts to jump to a rate of 1.04 million.

The Commerce Department report also said building permits, an indicator of future housing demand, fell 5.7 percent to an annual rate of 1.039 million in March after climbing 4 percent to a rate of 1.102 million in February. Economists expected building permits to show a much more modest decrease to a rate of 1.085 million.

Growth in Philadelphia-area manufacturing activity has seen a modest acceleration in April, a report from the Federal Reserve Bank of Philadelphia said Thursday. The Philly Fed's diffusion index of current activity rose to 7.5 in April from 5.0 in March, with a positive reading indicating growth in regional manufacturing activity. Economists expected the index to inch up to 6.0.

Foreign direct investment in China increased in March from a year ago, the Commerce Ministry said on Thursday. In March, foreign direct investment climbed 2.2 percent year-over-year to $12.4 billion, which was much higher than February's 0.9 percent rise.

The leading economic index in the UK, which measures future economic activity, increased for the second straight month in February, results of a survey by the Conference Board showed Wednesday. The Conference Board's leading economic index climbed 0.6 percent in February, following a 0.2 percent rise in the previous month. It was the largest monthly increase since June 2014.