Crude Oil Surges To End Above $105

(RTTNews) - U.S. crude oil made gains to end sharply higher on Wednesday, after some upbeat macroeconomic data out of the U.S. lifted investor sentiments for a steady demand growth, notwithstanding a more than expected increase in U.S. crude oil inventories. For the month, oil prices gained over 8.8 percent.

In some positive economic growth data from the U.S. showed activity in the country to have increased at a faster than expected rate in the second quarter, while employment in the private sector increased more than anticipated in July, a report from payroll processor Automatic Data Processing, Inc. (ADP) showed Wednesday.

The weekly official oil report from the Energy Information Administration showed U.S. crude oil inventories to have edged up 0.40 million barrels and gasoline stocks were up 0.80 million barrels in the weekended July 26. Analysts expected crude oil stocks to shed 2.45 million barrels and gasoline stocks to move down 1.5 million barrels last week.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, jumped $1.95 or 1.9 percent to close at $105.03 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for September delivery scaled a high of $104.90 a barrel intraday and a low of $102.93.

Yesterday, oil settled at a three-week low ahead of the weekly crude oil inventories report. Oil prices were also impacted with some mixed macroeconomic data out of the U.S. and the dollar strengthening against a few major currencies.

Tuesday after the market hours, the API said US crude oil inventories dipped 740,000 barrels, while gasoline stocks moved up 1.8 million barrels in the weekended July 26.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.67 on Wednesday, down from 81.84 late Tuesday in North American trade. The dollar scaled a high of 82.19 intraday and a low of 81.53.

The euro traded higher against the dollar at $1.3322 on Wednesday, as compared to $1.3263 late Tuesday in North America. The euro scaled a high of $1.3334 intraday and a low of $1.3214.

In economic news from the U.S., the ADP said private sector employment increased by 200,000 jobs in July following an upwardly revised increase of 198,000 jobs in June. Economists had been expecting employment to increase by about 179,000 jobs compared to the addition of 188,000 jobs originally reported for the previous month.

A report from the US Commerce Department revealed that gross domestic product increased by 1.7 percent in the second quarter following a revised 1.1 percent increase in the first quarter. Economists had expected GDP to rise by 1.1 percent compared to the 1.8 percent growth that had been reported for the previous quarter.

Chicago-area business activity expanded at a faster rate in July, MNI Indicators revealed in a report on Wednesday, although the Chicago business barometer rose by less than expected. MNI Indicators said the Chicago business barometer climbed to 52.3 in July from 51.6 in June, with a reading above 50 indicating an increase in regional business activity. Nonetheless, the barometer came in below economist estimates for a reading of 54.0.

Elsewhere, retail sales in Germany declined unexpectedly in June, data published by the Federal Statistical Office showed. Retail sales fell a seasonally and calendar adjusted 1.5 percent month-on-month in real terms in June, reversing a 0.7 percent gain in May and a 0.3 percent increase in April. This was in contrast to economists' expectation for a 0.2 percent growth.

German unemployment declined in July, reports said citing the latest figures from the Labor Ministry. The number of unemployed fell by 7,000 persons in July from a month earlier. Economists had forecast no change in the unemployment figure.

The euro area unemployment rate remained stable at seasonally adjusted 12.1 percent in June, data from Eurostat showed. The statistical office revised May's jobless rate to 12.1 percent from 12.2 percent estimated on July 2. The June rate was seen at 12.2 percent.

A separate flash report from Eurostat showed that inflation held steady at 1.6 percent in July. The rate came in line with economists' expectations.