Crude Oil Ends Sharply Higher On Weak Dollar, Yemen Crisis

(RTTNews) - U.S. crude oil surged to end sharply higher on Thursday, after the dollar weakened against a basket of few select currencies on some soft economic data from the U.S. Crude prices were also impacted after renewed violence reported in Yemen, where a proxy fight between Iran and Saudi Arabia threatens to destabilize the region.

Meanwhile, evidence of record U.S. crude supplies did little to change oil prices. On the other hand, crude oil made gains even as gasoline stocks showed a surprise draw-down in U.S. inventories.

U.S. crude-oil stockpiles rose by 5.3 million barrels to 489 million barrels last week, the highest since 1982, the U.S. Energy Information Administration said Wednesday. Gasoline stockpiles fell by 2.1 million barrels last week.

Reports of renewed violence in Yemen has also contributed to hike in crude prices. After having announced a halt to air strikes against Iran-backed Houthi rebels on Tuesday, Saudi Arabia is reported to have launched fresh aerial strikes, with at least 20 attacks throughout Yemen.

The UN Office for the Coordination of Humanitarian Affairs (OCHA) on Wednesday said the halting of air strikes by the Saudi Arabia-led coalition has sparked violence in the city of Aden, with ground fighting involving tanks erupting throughout the city and militants entering residential areas.

In some soft economic news, first-time claims for U.S. unemployment benefits unexpectedly increased last week, a report from the Labor Department showed Thursday. As well, new home sales in the U.S. pulled back much more than expected in March, after having reported a notable increase in the previous month.

Light Sweet Crude Oil futures for June delivery, the most actively traded contract, soared $1.58 or 2.8 percent, to settle at $57.74 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for June delivery scaled a high of $58.41 a barrel intraday and a low of $55.76.

On Wednesday, crude oil dropped $0.45 or 0.8 percent, to settle at $56.16 a barrel, after the weekly oil inventory report from the U.S. Energy Information Administration showed stockpiles to have increased much more than expected last week, although pared much of the losses as gasoline stockpiles declined more than expected with U.S. output dwindling further.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.18 on Thursday, down from its previous close of 98.07 on Wednesday in late North American trade. The dollar scaled a high of 98.43 intraday and a low of 97.17.

The euro trended higher against the dollar at $1.0842 on Thursday, as compared to its previous close of $1.0725 in North American trade late Wednesday. The euro scaled a high of $1.0845 intraday and a low of $1.0668.

On the economic front, first-time claims for U.S. unemployment benefits unexpectedly increased with initial jobless claims rising up to 295,000, an increase of 1,000 from the previous week's unrevised level of 294,000. Economists expected jobless claims to dip to 290,000.

After reporting a notable increase in new home sales in the U.S. in the previous month, a Commerce Department report on Thursday showed new home sales to have pulled back much more than expected in March. New home sales plunged 11.4 percent to an annual rate of 481,000 in March after jumping 5.6 percent to a revised rate of 543,000 in February. Economists expected new home sales to drop to an annual rate of 518,000 from the 539,000 originally reported for the previous month.

China's factory activity moved further into negative zone in April, logging the weakest operating conditions in a year, flash estimate released by Markit Economics showed Thursday. The HSBC manufacturing Purchasing Managers' Index fell to 49.2 in April, a 12-month low, from 49.6 in March. It was expected to remain at 49.6.

Eurozone private sector growth pulled back from March's 11-month high in April as concerns over Greece crisis started to weigh on economic activity despite the boost from the European Central Bank's quantitative easing. The flash composite output index fell unexpectedly to 53.5 in April from 54 in March, according to the purchasing managers' survey results published by Markit Economics. The expected score was 54.4.

Germany's private sector growth moderated at the start of the second quarter, survey data from Markit Economics showed Thursday. The flash composite output index fell to 54.2 in April from an eight-month high of 55.4 in March. The latest index reading was still the second-strongest since last September.

The French private sector growth weakened to near stagnation in April as manufacturing continued to shrink, flash survey data from Markit showed Thursday. The flash composite output index fell to 50.2 in April, a 3-month low, from 51.5 in March, signaling a fractional increase in output.

Germany's consumer confidence is set to rise further to the strongest level since October 2001, survey data from the market research group GfK showed Thursday. The forward-looking consumer climate index rose to 10.1 points in May from 10 in April. This was its highest value since October 2001, when the indicator was at 11.0 points.

French manufacturing confidence improved more than expected in April to the highest level since August 2011, survey data from the statistical office Insee showed Thursday. The manufacturing confidence index rose to 101 in April from 99 in March. It was expected to rise to 100. This was the highest score since August 2011.

U.K. retail sales declined for the first time in six months in March on petrol sales, casting doubt over economic growth gaining strength at the start of the year. Retail sales including auto fuel unexpectedly dropped 0.5 percent on a monthly basis in March, reversing a 0.6 percent rise in February, data from the Office for National Statistics showed Thursday.

This was the first fall in six months and the biggest since January 2014. Economists had forecast a 0.4 percent rise for March.

Another report from the ONS showed that public sector net borrowing excluding interventions decreased by GBP 0.4 billion to GBP 7.4 billion in March. The expected level was GBP 7 billion.