Crude Oil Ends Below $78 On Draghi Comments, OPEC Forecast

(RTTNews) - U.S. crude oil ended lower on Thursday, losing some ground after yesterday's rebound from three-year lows, with the Organization of the Petroleum Exporting Countries projecting a tepid demand outlook for its oil.

Investors also tracked developments in the eurozone after European Central Bank President Mario Draghi indicated the the bank would soon begin buying asset-backed securities to prop up the eurozone economy, which will cover a period of two years. The European Central Bank has left its key lending rate unchanged at 0.05 percent.

OPEC indicated demand for its crude end 2017 would drop to 28.2 million barrels a day, mainly on increased output from non-OPEC countries like the U.S., Canada, Russia, and other Latin American countries. Demand for OPEC crude is expected to rise in 2018, but believes it would be lower than the demand seen in 2013.

Some upbeat data from the U.S., however, helped oil to recoup some of the early losses. A report from the Labor Department on Thursday showed initial jobless claims for unemployment benefits in the U.S. pulled back more than expected in the week ended November 1, after having increased in each of the two previous weeks.

In a separate report, the Labor Department said U.S. labor productivity increased more than expected in the third quarter, reflecting another notable uptick in output.

Investors also await the U.S. non-farm payrolls report due Friday, which is expected to provide cues as to the strength of recovery in the labor market.

Light Sweet Crude Oil futures for December delivery, the most actively traded contract, dropped $0.77 or 1.0 percent to close at $77.91 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for December delivery scaled a high of $78.98 a barrel intraday and a low of $77.12.

On Wednesday, crude oil futures ended sharply higher at $77.19 a barrel, up $1.49 or 1.9 percent, after data from the U.S. Energy Information Administration showed crude stockpiles to have risen less than expected last week. Reports about a pipeline blast in Saudi Arabia also contributed a bit to oil's uptick.

Earlier in the week, crude had tumbled to a three-year low of $75.84 a barrel, down nearly 50 percent from its all-time highs.

Draghi said ECB policy makers are unanimously committed to using unconventional measures if needed to maintain price stability, and could use outright QE if deemed necessary. Draghi offered a downbeat assessment of the eurozone economy, with risks to the outlook skewed to the downside. He also highlighted geopolitical risks that could dampen confidence.

The dollar also firmed up further after European Central Bank President Mario Draghi said policy makers would use unconventional measures if need be to prop up the euro area economies.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 88.02 on Thursday, up from its previous close of 87.48 late Wednesday in North American trade. The dollar scaled a high of 87.95 intraday and a low of 87.13.

The euro trended lower against the dollar at $1.2387 on Thursday, as compared to its previous close of $1.2485 late Wednesday in North American trade. The euro scaled a high of $1.2533 intraday and a low of $1.2398.

In economic news from the U.S., data from the Labor Department showed initial jobless claims to have pulled back more than expected in the week ended November 1, at 278,000, down 10,000 from the previous week's revised level of 288,000.

A report from the U.S. Labor Department showed productivity to have climbed 2.0 percent in the third quarter following an upwardly revised 2.9 percent increase in the second quarter. Economists expected productivity to increase by about 1.5 percent, compared to 2.3 percent growth reported for the previous quarter.

Meanwhile, the European Central Bank today left its key lending rate unchanged at 0.5 percent. The deposit rate has been left untouched at minus 0.2 percent.

In economic news from the eurozone, German factory orders were up 0.8 percent month-on-month in September, coming back fairly strongly after recording a 4.2 percent decline in the preceding month. However, the increase in September fell short of forecasts for a 2.2 percent expansion.

Germany's construction sector grew for the first time in seven months during October, led by increased housing and commercial activity, a survey from Markit Economics showed Thursday. The purchasing managers' index for the construction sector climbed to a seven-month high of 51.5 in October from 50 in September.

The Bank of England today kept its interest rate unchanged at a historic-low of 0.5 percent and quantitative easing at GBP 375 billion as widely expected by economists.

The leading index for Japan rose more-than-expected in September, a preliminary report from the Cabinet Office showed Thursday. The index increased to 105.6 in September from 104.4 in August, slightly more than the 105.5 score projected by economists.

The Organization for Economic Co-operation and Development's in its Economic Outlook said global growth is expected to accelerate gradually if countries implement growth supportive policies. The OECD projects global GDP growth to reach a 3.3 percent rate in 2014 before accelerating to 3.7 percent in 2015 and 3.9 percent in 2016.

The United States is expected to expand 2.2 percent this year and around 3 percent in 2015 and 2016. Growth in the euro area is expected to pick up slowly, from 0.8 percent in 2014 to 1.1 percent in 2015 and 1.7 percent in 2016.