Crude Oil Ends Lower On Saudi Price Cut

(RTTNews) - U.S. crude oil ended lower Thursday, on news that Saudi Arabia has trimmed its prices for export to the U.S. and Asia, although the loss was limited with the more than expected decline in U.S. stockpiles yesterday.

The drop was also capped by some upbeat data from the U.S. indicating the economy to be picking up as initial jobless claims for unemployment benefits declined, beating expectations for an increase in claims last week.

Saudi Arabia, the world's largest oil exporter, is reported to have reduced its prices for for Asia and the U.S. with heavy discounts, while continuing to maintain its world market share. The move follows an OPEC decision last week to maintain oil production at existing levels, even as oil prices continued to plunge.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, dropped $0.57 or 0.8 percent to close at $66.81 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for January delivery scaled a high of $68.22 a barrel intraday and a low of $66.09.

On Wednesday, crude oil futures ended at at $67.38 a barrel, up $0.50 or 0.7 percent, after an official report from the Energy Information Administration showed crude oil inventories declining more than expected last week.

The U.S. Energy Information Administration report showed U.S. crude oil stockpiles to have declined 3.7 million barrels in the week ended November 28, even as analysts expected a 1.3 million barrels increase. Nonetheless, gasoline stocks rose 2.1 million barrels last week, while analysts anticipated a gain of 1.1 million barrels.

There was further disappointment for traders after European Central Bank President Mario Draghi on Thursday said policymakers will reassess the impact of the stimulus measures already taken early next year, but reiterated that the bank stands ready to take further action if required to avert deflation.

Draghi said the ECB discussed additional stimulus measures, even as officials considered all assets excluding gold.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 88.74 on Thursday, down from its previous close of 88.96 late Wednesday in North American trade. The dollar scaled a high of 89.12 intraday and a low of 88.21.

The euro trended higher against the dollar at $1.2365 on Thursday, as compared to its previous close of $1.2311 late Wednesday in North American trade. The euro scaled a high of $1.2456 intraday and a low of $1.2282.

In economic news, initial jobless claims in the U.S. dropped in the week ended November 29, pulling back from an unexpected increase in first-time claims for U.S. unemployment benefits in the previous week, a Labor Department report showed Thursday.

The initial jobless claims for unemployment benefits in the U.S. fell to 297,000, a decrease of 17,000 from the previous week's revised level of 314,000. Economists expected jobless claims to pull back to 295,000 from the 313,000 originally reported for the previous week.

Meanwhile, economic activity in the U.S. continued to expand in October and November, the Federal Reserve's Beige Book report showed Wednesday. A compilation of anecdotal evidence on economic conditions in the twelve Fed districts, the Beige Book also said a number of districts noted that contacts remained optimistic about the outlook for future economic activity.

There will not be any additional stimulus for the eurozone immediately, after European Central Bank President Mario Draghi on Thursday said policymakers will reassess the impact of the stimulus measures already taken early next year. Nevertheless, he reiterated that the bank stands ready to take further action if required to avert deflation.

The ECB also unveiled its latest staff macroeconomic projections with substantial downward revision to both growth and inflation forecasts. The growth forecast for this year was reduced to 0.8 percent from 0.9 percent seen in September. The projection for next year was cut to 1 percent from 1.6 percent. The outlook for 2016 was slashed to 1.5 percent from 1.9 percent. Both domestic demand and net exports were also revised down.

The European Central Bank left its key refinancing rate unchanged at a record low of 0.05 percent, while maintaining the deposit rate at -0.20 percent and the marginal lending rate at 0.30 percent.

Elsewhere, the Bank of England too has left interest rate steady at a record low of 0.50 percent and the size of asset purchases at GBP 375 billion at the end of the two-day rate setting meeting earlier today.

Germany's construction sector grew at the fastest rate in nine months in November, as activity rose in all three broad categories, a survey from Markit Economics showed Thursday. The purchasing managers' index for the construction sector rose to 53.5 in November from 51.5 in the previous month, the highest since February.