Crude Oil Ends Below $39 On Demand Growth Worries

(RTTNews) - U.S. crude oil ended lower on Wednesday, mostly on demand growth concerns, even as the official weekly crude oil inventory data from the U.S. Energy Information Administration showed stockpiles to have declined more than expected last week.

Investors continued to worry over demand growth for crude oil as China, the world's second largest energy consumer, continues to struggle with its slowing economy.

Several monetary measures taken by China recently has done little to prop up its economy, with its stocks taking a beating over the last couple of weeks since the devaluation of the yuan.

Investors continue to remain concerned by the situation in China, despite the nation's efforts to boost growth. Global markets bounced back with U.S. equities gaining, but most markets in Europe and Asia ended in the red with China's benchmark Shanghai Composite Index surrendering over 1.2 percent.

Meanwhile, OPEC shows no signs of cutting production despite waning demand from China and competition from alternative fuel sources.

Earlier today, a weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories declined 5.5 million barrels in the week ended August 21, while analysts expected stocks to rise 1.1 million barrels.

The report showed total U.S. crude oil inventories at 450.8 million barrels end last week, which is near levels not seen for this time of the year in the last 80 years.

Stocks at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 256,000 barrels last week, compared to an increase of 326,000 barrels in the earlier week.

Gasoline stocks increased 1.7 million barrels last week, while analysts expected a decline of 1.4 million barrels. Inventories of distillate, including heating fuel, rose 1.4 million barrels last week, with analysts anticipating an increase of 0.7 million.

Data from the oil and gas industry trade group, the American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have declined 7.3 million barrels last week.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, dropped $0.71 or 1.8 percent, to settle at $38.60 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for October delivery scaled a high of $39.86 a barrel intraday and a low of $38.59.

On Tuesday, crude oil futures for October delivery jumped $1.07 or 2.8 percent, to settle at $39.31 a barrel, as China lowered its benchmark interest rates to boost its economy with most global equity markets recovering from the brutal losses in the previous session following the massive sell-off on China worries.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.05 on Wednesday, up from its previous close of 93.96 in late North American trade on Tuesday. The dollar scaled a high of 95.10 intraday and a low of 93.72.

The euro trended lower against the dollar at $1.1342 on Wednesday, as compared to its previous close of $1.1517 in North American trade late Tuesday. The euro scaled a high of $1.1562 intraday and a low of $1.1336.

In economic news, U.S. manufactured durable goods climbed 2.0 percent in July after jumping an upwardly revised 4.1 percent in June, a Commerce Department report showed Wednesday. Economists expected orders to drop by 0.4 percent.

British retail sales growth improved unexpectedly in August, survey data from the Confederation of British Industry revealed Wednesday. The balance of the CBI's distributive trades survey rose to +24 in August from +21 in the previous month. Economists had expected a balance of +18.

U.K. mortgage approvals rose for a seventh month in a row in July to their highest level in seventeen months, in line with economists' expectations, figures from the British Bankers' Association showed Wednesday.

The seasonally adjusted number of mortgage approvals for house purchased climbed to 46,033 from 44,802 in June, which was revised from 44,488. Economists had forecast 46,000 approvals for July.

The combined real gross domestic product of the member countries of the Organization for Economic Cooperation and Development grew at a slightly slower pace in the second quarter, data showed Wednesday. Real GDP expanded 0.4 percent sequentially, which was slightly slower than the 0.5 percent growth seen in the first quarter.