Crude Oil Ends 2% Higher Amid Ukraine Troubles

(RTTNews) - U.S. crude oil surged to end higher for a second straight session Thursday, over concerns of escalating tensions with Russia after a Malaysian Airlines plane crashed in eastern Ukraine near the border with Russia, amid allegations it may have been shot down.

With an upbeat Chinese economy, the official inventory report from the U.S. Energy Information Administration indicating a significant drop in oil stockpiles last week also contributed to crude oil's rise.

Amid worries over the impact of new sanctions imposed on Russia by the U.S. and European Union, fresh tensions surfaced in Ukraine after a Malaysian Airlines passenger jet crashed in the rebel-dominated area of eastern Ukraine, close to the border with Russia. About 300 people are feared dead in the crash.

Meanwhile, some news reports suggest the aircraft may have been shot down at a height of about 33,000 feet with a surface-to-air missile. The region is predominantly controlled by pro-Russian separatist rebels fighting the Ukrainian government. However, the State Department said it could not currently confirm the cause of the Malaysian Airlines plane crash.

On Wednesday, the U.S. government imposed tougher sanctions on some major Russian banks and energy firms including major oil producer Rosneft, condemning Russia for their continued support to separatists in Ukraine.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, jumped $1.99 or 2.0 percent to close at $103.19 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for August delivery scaled a high of $103.29 a barrel intraday and a low of $101.27.

On Wednesday, oil futures surged amid expectations of increased demand on the back of some upbeat Chinese GDP data even as the official weekly oil report from the U.S. Energy Information Administration showed crude stockpiles to have declined more than expected last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.49 on Wednesday, down from its previous close of 80.53 late Wednesday in North American trade. The dollar scaled a high of 80.59 intraday and a low of 80.47.

The euro traded higher against the dollar at $1.3526 on Thursday, as compared to its previous close of $1.3525 late Wednesday in North American trade. The euro scaled a high of $1.3540 intraday and a low of $1.3518.

In economic news from the U.S., a report from the Labor Department showed initial jobless claims to have declined by 3,000 to a seasonally adjusted 302,000 in the week ended July 12. Economists expected jobless claims to increase to 310,000 in the week.

Data from the Commerce Department showed new residential construction in the U.S. to have unexpectedly dropped in June, falling 9.3 percent, to a nine-month low of 893,000 from the revised May estimate of 985,000. Economists had expected housing starts to climb to 1.020 million in the month.

Building permits fell 4.2 percent to an annual rate of 963,000 in June from the revised May rate of 1.005 million.

Meanwhile, the Philadelphia Federal Reserve's Business Outlook Survey indicated a continued expansion in the region's manufacturing sector in July, with the index of activity in the sector jumping to 23.9 in July, its highest level in over three years.