U.S. crude oil plunged to end sharply lower on Thursday, as the dollar trended higher after some positive economic data from the U.S. that showed better-than-expected numbers for the weekly initial claims for unemployment benefits.
The rally that drove crude oil prices sharply higher in the past few weeks may have lost some steam when Iran announced it will boost production immediately when sanctions are lifted.
Oil prices pulled back sharply on reports that Iran could lift its oil production to over four million barrels a day in less than a year if sanctions on Tehran were to be lifted. The claim was made by Iranian Oil Minister Bijan Zangeneh at a news conference in Tehran earlier today, according to Bloomberg.
Tehran and the West are in heavy talks toward a deal on Iran’s nuclear program.
Meanwhile, U.S. crude production decreased by 4,000 barrels a day to 9.369 million, the fist decline in inventories in 17 weeks. U.S. crude oil companies are said to be shutting down active rigs in order to give prices a boost.
Light Sweet Crude Oil futures for June delivery, the most actively traded contract, plummeted $1.99 or 3.3 percent, to settle at $58.94 a barrel on the New York Mercantile Exchange Thursday.
Crude prices for June delivery scaled a high of $61.31 a barrel intraday and a low of $58.49.
On Wednesday, crude oil gained $0.53 or 0.9 percent, to settle at $60.93 a barrel 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.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.63 on Thursday, up from its previous close of 94.16 on Wednesday in late North American trade. The dollar scaled a high of 94.83 intraday and a low of 93.89.
The euro trended lower against the dollar at $1.1269 on Thursday, as compared to its previous close of $1.1347 in North American trade late Wednesday. The euro scaled a high of $1.1393 intraday and a low of $1.1241.
On the economic front, a Labor Department report on Thursday showed a slight rebound in initial jobless claims in the week ended May 2, after reporting a notable pullback in first-time claims for U.S. unemployment benefits in the previous week.
The report said initial jobless claims edged up to 265,000, an increase of 3,000 from the previous week’s unrevised level of 262,000. Economists had expected jobless claims to climb to 280,000. While jobless claims showed a modest increase, they remained close to the fifteen-year low set in the previous week.
German factory orders recovered in March after falling for two straight months, supporting hopes of a moderate economic growth in the first quarter. Factory orders grew 0.9 percent month-on-month in March, offsetting February’s 0.9 percent fall, data from Destatis showed Thursday. But the growth rate was weaker than a 1.5 percent rise forecast by economists.
French industrial production dropped unexpectedly in March, figures from the statistical office Insee showed Thursday. Industrial production dropped 0.3 percent month-on-month in March, defying economists’ expectations for a 0.1 percent slight increase. In February, production had risen a revised 0.5 percent.
France’s merchandise trade deficit for March narrowed from a year ago, data from the French Customs showed Thursday. The trade deficit contracted to EUR 4.575 billion from EUR 4.698 billion in the same month last year. However, the deficit figure was much larger than February’s shortfall of EUR 3.623 billion.
The material has been provided by InstaForex Company – www.instaforex.com