Crude Oil Ends Below $60 On Strong Dollar, Demand Growth Concerns

(RTTNews) - U.S. crude oil ended sharply lower at a fresh 5-year low Thursday, on demand growth and oversupply concerns with the dollar strengthening against a band of select currencies after some robust economic data out of the U.S.

Investors continued to weigh the more than expected increase in U.S. stockpiles last week and the sluggish demand for oil after the Organization of Petroleum Exporting Countries slashed its global demand outlook yesterday.

Nevertheless, the slew of mostly upbeat economic data from the U.S. may auger well for oil prices as economic growth normally signals an increased demand for the commodity.

A Commerce Department report showed U.S. retail sales to have risen more than expected in November, generating optimism over the holiday shopping season while showing signs of some significant overall economic uptick.

U.S. retail sales data is used as a metric to measure consumer spending and which accounts for about 7o percent of the economy. Any uptick in retail sales is indicative of economic growth, and conversely, any weakness in retail sales is suggestive of sluggishness in the economy.

With U.S. crude inventories unexpectedly rising last week and Saudi Arabia stubborn in ruling out a cut in production, oil continues to tread on to even lower levels.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, dropped $0.99 or 1.6 percent to close at $59.95 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for January delivery scaled a high of $61.68 a barrel intraday and a low of $59.57.

On Wednesday, crude oil futures ended at $60.94 a barrel, down $2.88 or 4.5 percent, as worries about a supply glut and waning demand dragged down prices to fresh five year lows.

On Wednesday, data from the U.S. Energy Information Administration showed crude stockpiles to have unexpectedly risen by 1.5 million barrels last week. Meanwhile, OPEC slashed its forecast for crude oil demand in 2015, lowering it by about 300,000 barrels a day, to 28.9 million a day, the lowest in 12 years.

Analysts at Bank of America feel the OPEC may dissolve and oil prices would likely slide to $50 a barrel.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 88.69 on Thursday, up from its previous close of 88.23 late Wednesday in North American trade. The dollar scaled a high of 88.77 intraday and a low of 87.95.

The euro trended lower against the dollar at $1.2379 on Thursday, as compared to its previous close of $1.2447 late Wednesday in North American trade. The euro scaled a high of $1.2497 intraday and a low of $1.2373.

In economic news from the U.S., a report from the U.S. Labor Department showed jobless claims to have declined to 294,000 in the week ended December 6, down 3,000 from the previous week's unrevised figure of 297,000. Economists had expected claims to slip to 295,000.

Meanwhile, a report from the Commerce Department showed U.S. retail sales to have climbed by a more than expected 0.7 percent in November, following an upwardly revised 0.5 percent increase in October. Economists had forecast a 0.4 percent increase in retail sales.

Business inventories in the U.S. inched up by 0.2 percent in October, after rising 0.3 percent in September. This was in line with economists' expectations. Business sales edged down by 0.1 percent in October after coming in unchanged in September.

U.S. import prices in November dropped sharply with fuel prices falling significantly, a Labor Department report showed. Import prices tumbled 1.5 percent in November after slumping by a revised 1.2 percent in October. Economists expected import prices to fall by about 1.7 percent compared to the 1.3 percent drop originally reported for the previous month.

In economic news from the eurozone, the European Central Bank's second offering of its targeted longer term refinancing operation saw demand for loans by banks remaining weak. However, with EUR 129.84 billion of the EUR 317 billion offering getting allotted to 306 banks, the take-up was better than what was seen in the previous round in September.