Crude Oil Rebounds To End Higher, Despite Inventory Surge

(RTTNews) - U.S. crude oil rebounded to end higher on Thursday, after plunging over 6.6 percent yesterday with the official weekly oil inventory report from the Energy Information Administration showing an upsurge in crude stockpiles last week.

The uptick in oil prices came despite the dollar trending higher against a basket of major currencies.

In focus was oil storage issues, with the delivery and storage hub at Cushing filled 85 percent of its total capacity of 70.1 million barrels. Crude oil supplies at the delivery hub in Cushing, Oklahoma, jumped to 60.2 million barrels from 58.9 million, the EIA report showed Wednesday.

Markets remained concerned over U.S. crude storage facilities reaching its full capacity soon if inventories continue to rise leaps and bounds. Such a scenario could then force producers to cut production in the country. However, with most refinery lines getting back to production after annual maintenance shutdowns, the problem of storage space could just be a speculation.

Tehran's accord with the West over its nuclear program could see further oil flow into markets, but analysts believe it would be some time before it could actually swamp global markets.

With the U.S. and Saudi Arabian crude production at record levels, there could be a supply glut shortly and impact prices, even as production at the Organization of the Petroleum Exporting Countries continued to trend higher with output indicated over 30 million barrels a day.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, gained $0.37 or 0.7 percent to settle at $50.79 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for May delivery scaled a high of $52.07 a barrel intraday and a low of $50.63.

On Wednesday, crude oil plunged $3.56 or 6.6 percent to settle at $50.42 a barrel, after an official weekly oil inventory report from the Energy Information Administration showed crude stockpiles to have increased much more than expected last week.

A weekly report from the U.S. Energy Information Administration on Wednesday 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.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 98.97 on Thursday, up from its previous close of 98.05 on Wednesday in late North American trade. The dollar scaled a high of 99.04 intraday and a low of 98.04.

The euro trended lower against the dollar at $1.0663 on Thursday, as compared to its previous close of $1.0781 in North American trade late Wednesday. The euro scaled a high of $1.0790 intraday and a low of $1.0653.

On the economic front, a report from Labor Department on Thursday showed a rebound in first-time claims for U.S. unemployment benefits in the week ended April 4. The report said initial jobless claims climbed to 281,000, an increase of 14,000 from the previous week's revised level of 267,000. Economists expected jobless claims to rise to 285,000 from the 268,000 originally reported for the previous week.

Meanwhile, a Commerce Department report on Thursday showed U.S. wholesale inventories rose slightly more than expected in February, although wholesale sales continued to decrease.

The report showed wholesale inventories to have risen by 0.3 percent in February after climbing by an upwardly revised 0.4 percent in January. Economists expected wholesale inventories to edge up 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Germany's exports and industrial production recovered at a faster-than-expected pace in February, boosting hopes of strong recovery in the growth engine of Eurozone during the first quarter, despite the weakness in new orders.

Driven by capital goods output, industrial production rose a seasonally and working-day adjusted 0.2 percent in February from the prior month, the Economy Ministry reported Thursday. It was faster than economists' expectations for a 0.1 percent rise.

A report from Destatis showed that exports grew 1.5 percent in February from January, when it declined 2.1 percent. Economists had forecast a growth of 1 percent.

Similarly, imports advanced 1.8 percent, reversing January's 0.2 percent fall. The monthly growth was faster than a 1.2 percent rise forecast by economists.

U.K. trade deficit in goods widened more-than-expected in February to its highest level in seven months, data from the Office for National Statistics showed Thursday. The visible trade deficit increased to GBP 10.340 billion from GBP 9.174 billion in January. Economists had forecast a shortfall of GBP 9 billion.

U.K. house prices increased more than expected in March after falling a month ago, survey data from Lloyds Banking Group's Halifax division showed Thursday. House prices rose 0.4 percent month-on-month in March, offsetting a 0.4 percent fall in February. Economists had forecast a marginal 0.1 percent growth.