Crude Oil Ends Below $106 On Supply Data, Iraq

(RTTNews) - U.S. crude oil ended lower for a third straight session on Wednesday, after a weekly report from the U.S. Energy Information Administration showed crude oil stockpiles in the U.S. to have declined less than expected. Nonetheless, the drop was limited on reports of continued fighting in Iraq with jihadists attacking the country's largest oil refinery.

Earlier today, a report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have declined 0.58 million barrels in the week ended June 13, with analysts anticipating a drop of 1.0 million barrels. The EIA report showed U.S. crude oil inventories at 386.3 million barrels, end last week.

Gasoline stocks rose by 0.79 million barrels last week, while analysts anticipated a drop of 0.1 million barrels. Inventories of distillate, including heating fuel, rose 0.44 million barrels, with analysts looking for an increase of 0.25 million barrels.

The situation in Iraq continues to be of concern with Islamic militants advancing towards Iraq's capital, having attacked the country's biggest oil refinery with machine gun fire and mortars, according to news reports. Refinery sources said a spare-parts warehouse at the periphery of the complex caught fire in the overnight attack.

Iraqi forces, backed by Shia and Kurdish militias, are reported to have retaken several towns and are holding back an advance by Sunni militants north of Baghdad. Fierce fighting is going on between government forces and heavily armed jihadists belonging to the al-Qaeda-linked Islamic State in Iraq and the Levant (ISIS) in several parts of the country.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, dropped $0.39 or 0.4 percent to close at $105.97 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for July delivery scaled a high of $106.97 a barrel intraday and a low of $105.80.

On Tuesday, crude oil futures ended lower after some disappointing economic data from the U.S. including a more than expected drop in housing starts contributing to oil's weakness. However, worries about possible supply disruptions from Russia and Iraq limited oil's losses.

A report from the American Petroleum Institute late Tuesday showed crude oil stockpiles to have declined by 5.7 million barrels in the week ended June 13.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.54 on Wednesday, down from its previous close of 80.60 late Tuesday in North American trade. The dollar scaled a high of 80.65 intraday and a low of 80.47.

The euro traded higher against the dollar at $1.3573 on Wednesday, as compared to its previous close of $1.3547 late Tuesday in North American trade. The euro scaled a high of $1.3583 intraday and a low of $1.3540.

In economic news from the U.S., the Federal Open Market Committee on Wednesday reduced the pace of monthly asset purchases by $10 billion to $35 billion, as expected. Additional tapering is likely if the labor market continues to show improvement and inflation picks up, the Fed said in a statement accompanying its decision. With the economy rebounding after a rough patch during the winter, the Fed is now on pace to halt bond buying altogether within the next few months.

Meanwhile, the U.S. current account deficit rose more than expected to $111.2 billion in the first quarter. Economists expected a deficit of $99.8 billion for the quarter, compared to a deficit of $81.1 billion in the fourth quarter.

From Europe, Bank of England policymakers unanimously decided to leave the key interest rates unchanged in June and once again hinted at a possibility of a rate hike as early as this year. At its monetary policy meeting held on June 4 and 5, all nine members of the Monetary Policy Committee voted to retain the record low 0.50 percent interest rate and quantitative easing at GBP 375 billion, the minutes showed Wednesday.