Crude Oil Plunges To End 6.6% Lower As Inventories Soar

(RTTNews) - U.S. crude oil snapped a two-day gain to end 6.6 percent lower on Wednesday, after an official weekly oil inventory report from the Energy Information Administration showed crude stockpiles to have increased much more than expected last week.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have surged 10.9 million barrels in the week ended April 3, while analysts expected an increase of 3.2 million barrels. The report showed U.S. crude oil inventories at 482.4 million barrels end last week. Stockpiles are at its highest in about 80 years and have been climbing for the 13th straight week since the week ended January 9.

Crude oil supplies at the delivery hub in Cushing, Oklahoma, jumped to 60.2 million barrels from 58.9 million.

Gasoline stocks rose by 0.8 million barrels last week, with analysts anticipating a decline of 1.1 million barrels. Inventories of distillate, including heating fuel, dropped 0.3 million barrels.

EIA data also showed daily production in the U.S. to have risen by 18,000 barrels to 9.404 million barrels.

Data from the oil and gas industry trade group American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have risen by 12.2 million barrels last week.

Crude oil was already under pressure after Saudi Arabia reported a record output of 10.3 million barrels a day in March, with the Saudi Oil Minister Ali al-Naimi indicating his country's production will continue to remain around 10 million barrels a day. Saudi Arabia's oil production in February was 9.64 million barrels a day.

After an initial dip last week, oil prices have been surging after Tehran's accord with the western powers in Lausanne, Switzerland over curtailment of its nuclear program. The deal is expected to ease sanctions on Iran which has impacted its economy for long. However, analysts indicated that it would take several months for Iran to ramp up its production with no possibilities of an immediate supply glut.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, plummeted $3.56 or 6.6 percent to settle at $50.42 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for May delivery scaled a high of $53.23 a barrel intraday and a low of $50.37.

On Tuesday, crude oil jumped $1.84 or 3.5 percent to settle at $53.98 a barrel, ahead of the weekly supply data from the U.S. Energy Information Administration and industry group the American Petroleum Institute.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.94 on Wednesday, up from its previous close of 97.91 on Tuesday in late North American trade. The dollar scaled a high of 98.20 intraday and a low of 97.25.

The euro trended lower against the dollar at $1.0798 on Wednesday, as compared to its previous close of $1.0815 in North American trade late Tuesday. The euro scaled a high of $1.0888 intraday and a low of $1.0767.

On the economic front, euro area retail sales declined in February for the first time in five months albeit in line with economists' expectations, data from Eurostat revealed Wednesday. Retail sales fell 0.2 percent from January's growth of 0.9 percent, which was revised from 1.1 percent reported earlier. The decline was in line with economists' expectations. It is the first fall since a 0.9 percent drop in September.

German factory orders unexpectedly dropped for a second straight month in February due to stagnation in domestic demand and a decline in foreign bookings, suggesting that activity in the biggest euro area economy remained subdued at the start of the year.

Factory orders dropped a seasonally-and-working-day adjusted 0.9 percent from January, data from the Economy Ministry showed, defying economists' expectations for a 1.5 percent gain in the volatile indicator.

Germany's construction sector expanded for a second straight month in March, as new orders increased for the first time in three years, results of a survey from Markit Economics showed Wednesday. The seasonally adjusted purchasing managers' index, or PMI, for the construction sector, rose to 53.3 in March from 53.1 in the previous month. The reading is the highest since last November.

France's trade deficit decreased unexpectedly in February, as exports rose faster than imports, figures from the customs office showed Wednesday. The foreign trade deficit shrunk to EUR 3.4 billion in February from EUR 3.7 billion in the previous month. The deficit was forecast to increase to EUR 3.8 billion.