Crude Oil Ends Sharply Higher On Ukraine, Supply Data

(RTTNews) - U.S. crude oil surged to end at a more than one-week high on Wednesday, after an official weekly oil report from the Energy Information Administration showed an unexpected drop in U.S. crude oil stockpiles.

Investors also weighed probable supply disruptions from Russia, even as violence escalated in eastern Ukraine amid reports of fierce fighting between government forces and pro-Russian fighters.

Data from the U.S. Energy Information Administration earlier Wednesday showed U.S. crude oil inventories to have dropped 1.8 million barrels in the week ended May 2, while analysts expected an increase of 1.3 million barrels. Stockpiles aggregated 397.6 million barrels, down from the earlier week's total of 399.4 million barrels - the highest inventory level since late August 1982.

Gasoline stocks rose by 1.6 million barrels last week, while analysts anticipated a decline of 0.9 million barrels. Inventories of distillate, including heating fuel, declined 0.4 million barrels, even as analysts anticipated an increase of 1.5 million barrels.

Late Tuesday evening, the American Petroleum Institute released its weekly oil report which showed U.S. crude inventories to have surprisingly declined by 1.8 million barrels in the week ended May 2.

Light Sweet Crude Oil futures for June delivery, the most actively traded contract, surged $1.27 or 1.3 percent to close at $100.77 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for June delivery scaled a high of $100.99 a barrel intraday and a low of $99.78.

On Tuesday, crude oil futures ended higher due mainly to some soft economic news amid worries over the ongoing, escalating violence in eastern Ukraine.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.21 on Wednesday, up from its previous close of 79.14 late Tuesday in North American trade. The dollar scaled a high of 79.24 intraday and a low of 79.09.

The euro traded lower against the dollar at $1.3916 on Wednesday, as compared to its previous close of $1.3927 late Tuesday in North America. The euro scaled a high of $1.3940 intraday and a low of $1.3912.

In economic news from the U.S., the Labor Department said productivity dropped at an annual rate of 1.7 percent in the first quarter amid disruptions caused at U.S. workplaces by harsh winter weather. The consensus estimate called for a 1.2 percent quarter-over-quarter drop in productivity. The report showed unit labor costs to have jumped by 4.2 percent in the first quarter, the biggest increase in five quarters. Unit labor costs were expected to rise 2.8 percent.

In her testimony to the Joint Economic Committee in Washington, the Federal Reserve Chief Janet Yellen said that high a degree of monetary accommodation remains warranted due to slackness in labor markets and the continuation of inflation below the Fed's 2 percent objective.

Meanwhile, China's service sector growth eased from the prior month and remained weak in April, whereas manufacturing activity contracted for the fourth month, driving overall private sector activity further into negative zone. The headline HSBC services Purchasing Managers' Index dropped to 51.4 in April from 51.9 in March, results of a survey by Markit Economics showed Wednesday.

German factory orders declined 2.8 percent month-on-month in March, reversing the revised 0.9 percent rise posted in February, Destatis reported. Economists had forecast a 0.3 percent rise for March.