U.S. crude oil surged to for a second straight session on Wednesday, amid further evidence that U.S. shale producers are scaling back production after official data from the Energy Information Administration showed crude stockpiles in the U.S. to have declined more than expected last week. Nevertheless, U.S. production continued to remain firm.
Meanwhile, the Organization of the Petroleum Exporting Countries in its report said it expects the oversupply scenario to ease, but indicated no further rise in demand. Expectations of demand for its own oil this year remains at 29.3 million barrels a day, or 300,000 higher than 2014.
Earlier today, a weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories dropped 6.8 million barrels in the week ended June 5, while analysts expected a decline of 1.6 million barrels. The report showed U.S. crude oil inventories at 470.6 million barrels end last week. This is the sixth straight week of decline for crude oil inventories.
EIA said oil production in the U.S. climbed to 9.61 million barrels a day, up by 24,000 barrels from a week earlier.
Gasoline stocks dropped 2.9 million barrels last week, while analysts expected a drop of 0.5 million barrels. Inventories of distillate, including heating fuel, rose 0.9 million barrels, even as analysts anticipated an increase of 1.2 million barrels last week.
Data from the oil and gas industry trade group American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have plunged 6.7 million barrels last week.
Light Sweet Crude Oil futures for July delivery, the most actively traded contract, jumped $1.29 or 2.1 percent, to settle at $61.43 a barrel on the New York Mercantile Exchange Wednesday.
Crude prices for July delivery scaled a high of $61.82 a barrel intraday and a low of $60.45.
On Tuesday, crude oil jumped $2.00 or 3.4 percent, to settle at $60.14 a barrel, ahead of the weekly oil reports from the American Petroleum Institute and the U.S. Energy Information Administration, with expectation for sharp drop in inventories.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.64 on Wednesday, down from its previous close of 95.19 on Tuesday in late North American trade. The dollar scaled a high of 95.23 intraday and a low of 94.32.
The euro trended higher against the dollar at $1.1319 on Wednesday, as compared to its previous close of $1.1282 in North American trade late Tuesday. The euro scaled a high of $1.1385 intraday and a low of $1.1264.
On the economic front, China’s central bank on Wednesday sharply cut its inflation projection for the year and lowered the growth forecast as it expects government measures to underpin the momentum. The People’s Bank of China lowered its inflation forecast to 1.4 percent from 2.2 percent predicted earlier.
The growth forecast was reduced to 7 percent from 7.1 percent. China’s economic growth had eased to 7 percent in the first quarter, the weakest pace in six years, from 7.3 percent in the previous three months.
U.K. industrial production expanded in April on oil and gas extraction, while manufacturing output shrank due to the weakness in pharmaceutical products. Data from the Office for National Statistics showed that industrial output grew 0.4 percent month-on-month in April, better than the expected growth of 0.1 percent but weaker than March’s 0.6 percent increase.
French industrial and manufacturing output declined unexpectedly in April, the statistical office Insee revealed Wednesday. Industrial output dropped 0.9 percent from March when it remained flat. This was the first decline in five months. Economists had forecast production to grow 0.4 percent.
France’s current account turned to a surplus in April, as a decline in imports of crude oil imports led to a narrowing in the visible trade deficit, the Bank of France said Wednesday. The current account showed a surplus of EUR 0.4 billion for April versus a deficit of EUR 1.4 billion for March. The merchandise trade deficit narrowed to EUR 1.1 billion from EUR 3.2 billion.
Producer prices in Japan were up 0.3 percent on month in May, the Bank of Japan said on Wednesday. That beat the forecast for an increase of 0.2 percent following the 0.1 percent gain in April.
The material has been provided by InstaForex Company – www.instaforex.com