Crude Oil Jumps To End Above $51 On Saudi Moves, Even As Supplies Surge

(RTTNews) - U.S. crude oil ended higher on Wednesday, as investors mulled over Saudi Arabia's move to raise selling prices for its oil to consumers in the U.S., Europe and Asia for April, which may indicate an uptick in demand from a Saudi viewpoint. Oil prices surged even as the official weekly oil report from the Energy Information Administration showed crude stockpiles to have jumped much more than expected last week, with inventories at its highest in about 80 years.

The upbeat market sentiment comes after the Saudi Arabian oil minister in a speech in Berlin Wednesday said he expects oil prices to stabilize with demand gradually rising, and global economic growth more robust.

Saudi Oil Minister Ali al-Naimi called on non-OPEC producers to actively contribute and cooperate in balancing the oil market, stressing that his country could not be expected to subsidize high-cost producers.

Saudi Arabia also indicated increasing selling prices for its Arab Light crude oil for buyers in the U.S., Europe and Asia for April.

However, analysts believe the Saudi calculation of the demand for oil may not have taken into account the latest surge in inventories reported by the U.S. Energy Information Administration today.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 10.3 million barrels in the week ended February 27, while analysts expected an increase of 3.7 million barrels. The report showed U.S. crude oil inventories at 444.7 million barrels end last week, the most in over 80 years. This is also the largest weekly increase since 2001.

Gasoline stocks increased by 46,000 barrels last week, with analysts anticipating a decline of 1.9 million barrels. Inventories of distillate, including heating fuel, declined 1.7 million barrels, even as analysts estimated a drop of 2.2 million.

Late Tuesday, data from oil patch watcher the American Petroleum Institute showed U.S. crude inventories to have risen 2.9 million barrels for the week ended February 27.

Light Sweet Crude Oil futures for April delivery, the most actively traded contract, jumped $1.01 or 2.0 percent to settle at $51.53 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for April delivery scaled a high of $51.95 a barrel intraday and a low of $49.60.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.99 on Wednesday, up from its previous close of 95.37 on Tuesday in late North American trade. The dollar scaled a high of 96.06 intraday and a low of 95.32.

The euro trended lower against the dollar at $1.1074 on Wednesday, as compared to its previous close of $1.1176 on Tuesday in late North American trade. The euro scaled a high of $1.1188 intraday and a low of $1.1063.

On the economic front, a report from payroll processor ADP on Wednesday showed solid private sector jobs growth of above 200,000 in February, although the pace of growth was notably slower when compared to the previous month. ADP said private sector employment increased by 212,000 jobs in February compared to an upwardly revised jump of 250,000 jobs in January. Economists had expected an increase of about 220,000 jobs compared to the addition of 213,000 jobs originally reported for the previous month.

Activity in the U.S. service sector unexpectedly grew at a slightly faster rate in February, a report from the Institute for Supply Management showed Wednesday. The ISM said its non-manufacturing index inched up to 56.9 in February from 56.7 in January, with a reading above 50 indicating an expansion in service sector activity. Economists expected the index to edge down to 56.5.

China's service sector expansion accelerated slightly in February, led by solid rise in new work, results of a survey by Markit Economics and HSBC showed Wednesday. The services business activity index rose slightly to 52.0 in February from January's six- month low of 51.8.

The Eurozone private sector expanded in February albeit at a slower than initially estimated pace, survey data from Markit Economics showed Wednesday. The composite output index rose to 53.3 in February from 52.6 in January. The reading was slightly below the flash score of 53.5.

Eurozone retail sales growth accelerated unexpectedly in January on both food and non-food turnover, Eurostat reported Wednesday. Retail sales were up 1.1 percent on a monthly basis, faster than a revised 0.4 percent growth in December. The monthly growth rate was forecast to ease to 0.2 percent from December's originally estimated growth of 0.3 percent.

The U.K. service sector expansion slowed unexpectedly in February, survey data from Markit showed Wednesday. The Markit/Chartered Institute of Purchasing and Supply Purchasing Managers' Index for the service sector decreased to 56.7 in February from 57.2 in January. The score was forecast to rise to 57.5. This marked the twenty-sixth month of expansion.

Shop prices in the United Kingdom declined at a faster rate in February, defying expectations for a slower drop, the British Retail Consortium said on Wednesday. Shop prices fell 1.7 percent year-over-year after the 1.3 percent drop in January. Economists expected a 1.2 percent drop.