Crude Oil Plunges 3% To End Below $96 A Barrel

(RTTNews) - U.S. crude oil plummeted three percent to end sharply lower Thursday, after the dollar strengthened against a basket of major currencies and on news reports of increased Libyan oil production and export that eased supply concerns. Oil prices were also impacted after some soft manufacturing data out of China, the second largest energy consumer in the world, fueling demand growth worries.

Reports of oil exports and production in Libya returning to normal helped push oil prices lower, even as expectation of increased exports from South Sudan raised fears of a supply glut.

China's manufacturing activity eased in December as both new orders and production slowed, suggesting that the world's second largest economy still faced some downside pressure in the wake of its ongoing economic reforms and squeeze on credit. A survey by Markit Economics and HSBC showed the headline index dropped to a three-month low of 50.5 in December from 50.8 in November. Factory activity slowed in December from the previous month as export orders and output weakened.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, plunged $2.98 or 3.0 percent to close at $95.44 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for February delivery scaled a high of $98.97 a barrel intraday and a low of $95.42.

Tuesday after the market hours, the API reported a larger-than-expected drop of 5.7 million barrels in U.S. crude inventories for the week ended December 27.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.57 on Thursday, up from its previous close of 80.21 late Tuesday in North American trade. The dollar scaled a high of 80.71 intraday and a low of 80.08.

The euro traded lower against the dollar at $1.3663 on Thursday, as compared to its previous close of $1.3753 late Tuesday in North America. The euro scaled a high of $1.3774 intraday and a low of $1.3630.

In economic news from the U.S., the Labor Department said initial jobless claims dipped 2000 to 339,000 in the weekended December 28 from the previous week's revised figure of 341,000. The figure from the previous week was upwardly revised from the 338,000 originally reported.

A Commerce Department report on Thursday showed U.S. construction spending to have risen in line with economists' estimates in November, as increased private construction spending more than offset a drop in spending on public construction. Construction spending rose 1.0 percent to a seasonally adjusted annual rate of $934.4 billion in November from the revised October estimate of $925.1 billion.

A report from the Institute for Supply Management on Thursday showed a modest slowdown in the pace of growth in December, after reporting growth in U.S. manufacturing activity at the fastest pace in over two years in the previous month. The ISM purchasing managers index edged down to 57.0 in December from 57.3 in November, although a reading above 50 still indicates growth in the sector. Nonetheless, the modest decline was in line with economists' estimates.

From the eurozone, the German manufacturing sector expanded slightly more than initially estimated in December, final data from Markit Economics showed. The Markit/BME Purchasing Managers' Index rose to 54.3 in December from 52.7 in November. The score was slightly above the initial estimate of 54.2.

Meanwhile, eurozone manufacturing sector growth picked up further in December, as estimated in the flash report published last month, detailed results of a Markit Economics survey showed. The headline purchasing managers' index rose for a third month in a row at 52.7 in December. The reading was unchanged from the flash reading and was higher than November's score of 51.6.

German employment reached another record high in 2013, but the rise in employment was only about half of the average of 2011 and 2012, a report from Destatis said. An average of 41.78 million persons were employed in 2013, up 232,000 or 0.6 percent from the previous year. Employment hit a record for the seventh month in a row.

Data from the Markit/CIPS purchasing managers' survey for December showed activity indicator for the manufacturing sector in U.K. well above the neutral mark, indicating a strong improvement in overall operating conditions. The index declined to 57.3 from November's 33-month high of 58.1, which was revised from its initial reading. Economists expected a score of 58.4 for December.