Crude Oil Ends Lower Ahead Of Supply Data

(RTTNews) - U.S. crude oil snapped a three-day gain to end lower on Wednesday, as worries over a supply glut resurfaced ahead of the weekly official inventory data from the U.S. Energy Information Administration due Thursday. Meanwhile, investors mulled over minutes of the Federal Reserve's January policy meet released today.

Crude prices tumbled amid speculation that recent gains have been overdone in light of the global supply glut. With the Organization of the Petroleum Exporting Countries refraining from cutting production, the low prices have disadvantaged many non-OPEC competitors, with producers in the U.S. and Canada opting to cut manpower and shelve major investments.

The minutes of the Federal Reserve's most recent policy meeting showed the Fed was in no hurry to signal a possible interest rate hike in January meeting. However, that meeting took place prior to January's exceptionally strong jobs report was available, and a number of policy makers have since indicated a willingness to raise rates in June.

The Fed said information reviewed for the January 27-28 meeting showed economic activity expanded at a solid pace over the second half of 2014, and labor market conditions had again improved in recent months.

U.S. inventories data from industry group the American Petroleum Institute is due later on Wednesday, while the official U.S. Energy Information Administration is scheduled to release its report on Thursday.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, tumbled $1.39 or 2.6 percent to settle at $52.14 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for March delivery scaled a high of $53.41 a barrel intraday and a low of $51.84.

On Tuesday, crude oil settled sharply higher on a weak dollar and rising optimism of demand growth as oil producers continued to scale down investments, and ahead of the weekly supply data.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.46 on Wednesday, up from its previous close of 94.13 on Tuesday in North American trade. The dollar scaled a high of 94.53 intraday and a low of 94.01.

The euro trended lower against the dollar at $1.1339 on Wednesday, as compared to its previous close of $1.1413 on Tuesday in North American trade. The euro scaled a high of $1.1418 intraday and a low of $1.1336.

In economic news from the U.S., a Labor Department report showed producer prices fell much more than expected in January, reflecting another substantial decrease in energy prices. The producer price index for final demand slumped 0.8 percent in January after edging down by 0.2 percent in each of the two previous months. Economists expected the index to drop by 0.4 percent. This is the biggest monthly decrease since the final demand series began in November of 2009.

A Federal Reserve report on Wednesday showed industrial production in the U.S. to have increased modestly in January, partly reflecting a significant rebound in utilities output. Industrial production edged up by 0.2 percent in January after dipping by a revised 0.3 percent in December. Economists expected production to rise by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month.

A Commerce Department report on Wednesday showed U.S. housing starts to have pulled back more than expected in January, after reporting a substantial rebound in new residential construction in the previous month. Housing starts in January tumbled 2.0 percent to an annual rate of 1.065 million after jumping 7.1 percent to the revised December estimate of 1.087 million. Economists expected housing starts to fall by 1.7 percent to a rate of 1.070 million in January from the 1.089 million originally reported for the previous month.

U.S. mortgage applications tumbled last week as interest rates jumped, latest data from the Mortgage Bankers Association showed. Loan applications fell 13.2 percent for the week ended February 13. Refinancing dropped 14 percent, and in a sign that potential home buyers are extremely sensitive to interest rates, home purchase applications were down 7 percent.

Data from the Office for National Statistics on Wednesday showed the U.K. unemployment rate to have declined to its lowest in more than six years in the fourth quarter of 2014, while earnings increased more-than-expected and remained well above inflation. The jobless rate dropped to 5.7 percent during the October to December period, which is below the 6 percent recorded during the three months to September. Economists had forecast a jobless rate of 5.8 percent.

The Bank of Japan on Wednesday kept its monetary policy unchanged as expected, but lowered its inflation assessment after data showed earlier this week that the country exited recession. The bank voted 8-1 to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion. The bank also left its asset purchase policy unchanged.

Eurozone construction output declined for the second straight month in December, at a faster pace, data from Eurostat showed. Output in the construction sector fell 0.8 percent month-on-month in December, following a 0.5 percent drop in November, which was revised from a 0.1 percent decrease.