Crude Oil Plummets Near 9% As Inventories Surge

(RTTNews) - U.S. crude oil plummeted to settle 8.7 percent lower on Wednesday, as supply glut concerns resurfaced after an official weekly oil report from the Energy Information Administration showed crude stockpiles in the U.S. to have surged more than expected last week. Some disappointing private sector jobs data did little to support oil prices.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have jumped 6.3 million barrels in the week ended January 30, while analysts expected an increase of 2.8 million barrels. The report showed U.S. crude oil inventories at 413.0 million barrels end last week.

Gasoline stocks increased by 2.3 million barrels last week, while analysts anticipated a decline of 0.8 million barrels. Inventories of distillate, including heating fuel, increased 1.8 million barrels with analysts expecting a decline of 2.1 million barrels.

The American Petroleum Institute late Tuesday said crude oil supplies in the U.S. rose 6.1 million barrels last week.

Oil recently hit a 6-year low near $44, but analysts say prices have firmed on speculation that non-OPEC producers will curb supplies.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, plunged $4.60 or 8.7 percent to settle at $48.45 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for March delivery scaled a high of $52.56 a barrel intraday and a low of $47.95.

On Tuesday, crude oil soared to end at $53.05 a barrel, up $3.48 or 7.0 percent, as the dollar trended lower after some soft economic data from the U.S. and China.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.02 on Wednesday, up from its previous close of 93.75 late Tuesday in North American trade. The dollar scaled a high of 94.10 intraday and a low of 93.61.

The euro trended lower against the dollar at $1.1422 on Wednesday, as compared to its previous close of $1.1479 late Tuesday in North American trade. The euro scaled a high of $1.1486 intraday and a low of $1.1401.

In economic news from the U.S., private sector employment in the U.S. rose less than expected in January, a report from payroll processor ADP showed Wednesday. ADP said private sector employment increased by 213,000 jobs in January following an upwardly revised increase of 253,000 jobs in December. Economists had expected employment to climb by about 223,000 jobs compared to the addition of 241,000 jobs originally reported for the previous month.

After reporting a notable slowdown in the pace of growth in U.S. service sector activity in the previous month, the Institute for Supply Management's report on Wednesday showed a modest uptick to its index of activity in the sector in January.

The ISM said its non-manufacturing index inched up to 56.7 in January from an upwardly revised 56.5 in December, with a reading above 50 indicating growth in the service sector. Economists had expected the non-manufacturing index to edge up to 56.5 from the 56.2 originally reported for the previous month.

China's service sector expansion slowed in January, figures from Markit Economics and HSBC Bank showed Wednesday. The services business activity index fell to 51.8 in January from 53.4 in December. This marked the slowest expansion rate in six months.

Eurozone retail sales grew 0.3 percent in December from the previous month, slower than November's 0.7 percent increase, Eurostat figures showed. Nonetheless, this was the third consecutive rise in sales.

The Eurozone private sector expanded at the fastest pace since July last year as output expanded in Germany, Italy and Spain. But the downturn in the French economy extended into its ninth month. The final composite output index rose to 52.6 in January from 51.4 in December. It was also above the flash reading of 52.2.

Germany's service sector activity growth accelerated at the beginning of 2015 amid rising new business, survey data from Markit Economics showed Wednesday. The final services Purchasing Managers' Index climbed to 54 in January from 52.1 in December. The flash score was 52.7.

The French service sector fell back into negative territory in January, reversing a marginal growth in the prior month, final data from Markit showed Wednesday. The services PMI fell to 49.4 from 50.6 in December. It stayed also below the flash score of 49.5.

The U.K. service sector expanded more than expected in January as new business rose at a faster pace, survey data from Markit showed Wednesday. The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index rose to 57.2 in January from 55.8 in December. The score was forecast to rise to 56.3.