Crude Oil Ends Higher As Inventories Drop

U.S. crude oil ended at its highest for the year on Wednesday, after official data from the Energy Information Administration showed stockpiles to have declined for the first time in nearly four months, amid continued tensions in the Middle East and the ongoing Greek financial crisis.

The decline comes after the closure of Zueitina oil port, further cutting into already falling supplies from Libya.

Nonetheless, crude oil pared gains after having crossed the $62 a barrel mark intraday, on some soft economic data from the U.S. that showed employment in the private sector to have slowed down, increasing less than expected.

Earlier today, a weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories declined 3.9 million barrels in the week ended May 1, while analysts expected an increase of 1.5 million barrels. The report showed U.S. crude oil inventories at 487.0 million barrels end last week. Stockpiles have declined for the first time, after climbing for 16 straight weeks since the week ended January 9.

Crude supplies at Cushing, Oklahoma fell 12,000 barrels last week-end.

Gasoline stocks increased by 0.4 million barrels last week, while inventories of distillate, including heating fuel, gained 1.5 million barrels.

Data from the oil and gas industry trade group American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have dropped by 1.5 million barrels last week.

Protests at a busy port in Libya threatened supplies from the region, while Saudi Arabia raised its price for crude oil.

Light Sweet Crude Oil futures for June delivery, the most actively traded contract, gained $0.53 or 0.9 percent, to settle at $60.93 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for June delivery scaled a high of $62.58 a barrel intraday and a low of $60.54.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.04 on Wednesday, down from its previous close of 95.14 on Tuesday in late North American trade. The dollar scaled a high of 95.22 intraday and a low of 93.88.

The euro trended higher against the dollar at $1.1356 on Wednesday, as compared to its previous close of $1.1186 in North American trade late Tuesday. The euro scaled a high of $1.1372 intraday and a low of $1.1176.

On the economic front, a report from payroll processor ADP on Wednesday showed private sector employment increased much less than expected in April, in another sign of sluggishness in the U.S. labor market.

ADP said employment in the private sector increased by 169,000 jobs in April compared to a downwardly revised increase of 175,000 jobs in March. Economists had expected private sector employment to climb by about 200,000 jobs compared to the addition of 189,000 jobs originally reported for the previous month.

Labor productivity in the U.S. showed another notable decrease in the first quarter of 2015, a report from the Labor Department showed Wednesday. Labor productivity fell by 1.9 percent in the first quarter following a 2.1 percent decrease in the fourth quarter. The continued drop in productivity matched economist estimates.

Meanwhile, the Labor Department said unit labor costs surged up by 5.0 percent in the first quarter after jumping by 4.2 percent in the fourth quarter. Economists had expected costs to increase by 4.5 percent.

Elsewhere, the services sector in China expanded at an accelerated pace in April, the latest survey from HSBC showed on Wednesday, with a PMI score of 52.9. That’s up from 52.3 in March, and it moves further above the boom-or-bust score of 50 that separates expansion from contraction.

Eurozone retail sales declined in March for the first time in six months as both food and non-food product turnover decreased from February. Retail sales volume dropped 0.8 percent month-on-month in March, reversing a 0.1 percent rise in February, Eurostat reported Wednesday. This was the first decline since September and was larger than an expected drop of 0.7 percent.

Eurozone private sector growth slowed slightly less than initially estimated in April, final data from Markit Economics showed Wednesday. The composite output index fell slightly to 53.9 in April from 54 in March. The flash score was 53.5. The rate of expansion in economic output held broadly steady at March’s 11-month high.

Germany’s private sector growth weakened more than initially estimated in April, data from Markit revealed Wednesday. The composite output index fell to 54.1 in April from an eight-month high of 55.4. It was also below the flash score of 54.2. The latest index reading still indicates solid output growth.

The French private sector growth eased further in April but slowed less than previously estimated, final data from Markit showed Wednesday. The composite output index fell to 50.6 in April from 51.5 in March. The reading signals a marginal growth rate. The flash score was 50.2.

The British services sector grew the most in eight months in April, led by marked gains in new business, which prompted firms to continue with robust pace of job creation, survey results from Markit Economics revealed Wednesday. The seasonally adjusted Markit/CIPS UK Services Purchasing Managers’ Index for the services sector rose to 59.5 from 58.9 in March. Economists had expected a score of 58.5.

The material has been provided by InstaForex Company – www.instaforex.com

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