Crude Oil Plummets Below $57 A Barrel As Stockpiles Rise

(RTTNews) - U.S. crude oil plummeted to end at a more than two-month low on Wednesday, after a weekly official oil report from the Energy Information Administration showed U.S. inventories to have increased more than expected last week, even as reports indicate the Organization of the Petroleum Exporting Countries to have exceeded its output target for June.

This is crude oil's lowest settlement since April 22.

Crude oil prices resumed its downtrend Wednesday morning after the latest offer from Greece fell short of creditor demands.

Earlier today, a weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories increased 2.4 million barrels in the week ended June 26, while analysts expected stocks to decline 1.3 million barrels. The report showed total U.S. crude oil inventories at 465.4 million barrels end last week. The increase in crude oil stockpiles come after eight straight weeks of decline.

EIA said oil production in the U.S. rose by 9,000 barrels a day to 9.7 million barrels a day, from 9.60 million barrels a week earlier.

Gasoline stocks dropped 1.8 million barrels last week, even as analysts anticipated a rise of 0.3 million barrels. Inventories of distillate, including heating fuel, rose 0.4 million barrels last week, while analysts expected a rise of 1.1 million barrels.

Data from the oil and gas industry trade group American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have increased 1.9 million barrels last week.

Meanwhile, Greece continued to be in focus with reports indicating Greek Prime Minister Alexis Tsipras to have sent a letter stating he will accept demands made by the country's creditors over the weekend with minor changes. The two-page communique was sent to the heads of the European Commission, the International Monetary Fund and the European Central Bank.

Nevertheless, German Chancellor Angela Merkel has firmly reiterated her position that any new talks will have to wait until after the Greek referendum on Sunday.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, plunged $2.51 or 4.2 percent, to settle at $56.96 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for August delivery scaled a high of $58.98 a barrel intraday and a low of $56.82.

On Tuesday, crude oil prices gained $1.14 or 2.0 percent, to settle at $59.47 a barrel, on developments in Greece and after talks between Iran and the western powers was extended by a week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.23 on Wednesday, up from its previous close of 95.52 on Tuesday in late North American trade. The dollar scaled a high of 96.25 intraday and a low of 95.47.

The euro trended lower against the dollar at $1.1058 on Wednesday, as compared to its previous close of $1.1140 in North American trade late Tuesday. The euro scaled a high of $1.1172 intraday and a low of $1.1054.

On the economic front, private sector employment in the U.S. increased more than expected in June, a report from payroll processor ADP said Wednesday. Employment in the private sector jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May. Economists expected an increase of about 220,000 jobs compared to the addition of 201,000 jobs originally reported for the previous month.

The ISM said its purchasing managers index rose to 53.5 in June from 52.8 in May, with a reading above 50 indicating an increase in manufacturing activity. Economists expected the index to edge up to 53.2.

Elsewhere, the manufacturing sector in China continued its path of narrow expansion, with a manufacturing PMI score of 50.2 in June, the National Bureau of Statistics said on Wednesday. That was unchanged from the May reading, although shy of estimates for 50.4.

China's manufacturing sector contracted at a slightly slower pace in June, HSBC said in Wednesday's revised manufacturing PMI with a score of 49.4. That was a downward revision from last month's preliminary reading of 49.6 - but up from the 49.2 reading in May.

The euro area manufacturing sector expanded as initially estimated in June, final data from Markit showed Wednesday. The Purchasing Managers' Index rose to 52.5 in June from 52.2 in May. The reading came in line with flash estimate published on June 23. It was the highest reading since April 2014.

Germany's manufacturing sector expanded as estimated on stronger production and new orders in June, final data from Markit showed Wednesday. The Markit/BME manufacturing Purchasing Managers' Index rose to 51.9 in June from a three-month low of 51.1 in May. The reading was in line with expectations.

British manufacturing sector expanded at the slowest pace in more than two years in June as production and new orders logged slower growth, survey results from Markit Economics showed Wednesday. The seasonally adjusted Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index dropped unexpectedly to 51.4 in June from revised 51.9 in May. Economists expected the index to rise to 52.5 from the initially estimated value of 52 in May.