Crude Oil Ends Lower As Dollar Strengthens

(RTTNews) - U.S. crude oil snapped a two-day gain to end lower on Thursday, with the dollar strengthening against some major currencies after the U.S. Federal Reserve Chief Janet Yellen hinted of an interest rate hike as early as next spring. The supply scenario with a more-than-expected jump in U.S. crude oil inventories last week, also weighed on oil prices.

A report from the U.S. Energy Information Administration yesterday showed U.S. crude oil inventories to have jumped more than expected, by 5.9 million barrels in the week ended March 14.

The Federal Reserve on Wednesday trimmed another $10 billion from its monthly asset-purchase program, lowering the monthly bond buys to $55 billion. The central bank altered its forward guidance on interest rates, dropping its 6.5 percent unemployment target in favor of a broader range of indicators.

Bond buying could be wound down in six months, with a possible rate hike six months later if the economy grows according to the latest Fed projections, Yellen said.

The Fed reiterated plans to keep interest rates exceedingly low for the foreseeable future with 13 of 16 members not expecting the first rate hike until 2015, reflecting a somewhat dimmer view of the U.S. economic recovery.

In economic news from the U.S., manufacturing activity in the Philadelphia-area rebounded in March, a Federal Reserve Bank of Philadelphia's survey showed Thursday. Meanwhile, a Conference Board report showed its index of leading U.S. economic indicators rose more than expected in February, suggesting any weather-related volatility would likely be short lived.

Light Sweet Crude Oil futures for April delivery on expiration day shed $0.94 or 0.9 percent to close at $99.43 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for April delivery scaled a high of $100.82 a barrel intraday and a low of $99.08.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, dropped $0.27 or 0.3 percent to close at $98.90 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for May delivery scaled a high of $99.45 a barrel intraday and a low of $98.09.

Yesterday, crude oil ended sharply higher even as the official inventory data showed a more-than-expect rise in U.S. crude stockpile, and ahead of the U.S. Federal Reserve policy review meet outcome.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.20 on Thursday, up from its previous close of 80.02 late Wednesday in North American trade. The dollar scaled a high of 80.35 intraday and a low of 79.92.

The euro traded lower against the dollar at $1.3781 on Thursday, as compared to its previous close of $1.3833 late Wednesday in North America. The euro scaled a high of $1.3844 intraday and a low of $1.3750.

In economic news, manufacturing activity in the Philadelphia-area rebounded in March, a Federal Reserve Bank of Philadelphia's Business Outlook Survey showed Thursday. The Philly Fed's diffusion index of current activity jumped to a positive 9.0 in March from a negative 6.3 in February. A positive reading indicates an increase in regional manufacturing activity. Economists expected the index to show a much more modest rebound to a positive reading of 3.2.

A report from the National Association of Realtors on Thursday showing a modest drop in U.S. existing home sales in February, attributed mainly to rising prices and severe winter weather. Existing home sales edged down 0.4 percent to a seasonally adjusted annual rate of 4.60 million in February after falling 5.1 percent to a rate of 4.62 million in January. The drop was in line with economists' estimates. The pace of existing home sales dropped to its lowest level since July of 2012, when it was 4.59 million.

A Labor Department report on Thursday showed a modest rebound in initial jobless claims in the week ended March 15, after reporting first-time claims for U.S. unemployment benefits at a three-month low in the previous week. Initial jobless claims edged up to 320,000, an increase of 5,000 from the previous week's unrevised figure of 315,000. Economists expected jobless claims at 325,000.

A Conference Board report on Thursday showed its index of leading U.S. economic indicators rose more than expected in February, suggesting any weather-related volatility will be short lived. The Conference Board's leading economic index rose by 0.5 percent in February after edging up by a downwardly revised 0.1 percent in January. Economists expected the index to rise by 0.3 percent, matching the increase originally reported for the previous month.

From Europe, the U.K. manufacturing sector activity remained robust in March with an overall increase in demand, the Industrial Trends Survey from the Confederation of British Industry showed Thursday.