Crude Oil Soars Above $56 On Supply Data, Robust Demand Forecast

(RTTNews) - U.S. crude oil surged for fifth straight session to end at a near six percent high on Wednesday, after an official weekly oil inventory report from the Energy Information Administration showed crude stockpiles to have increased less than expected last week. Oil prices were also supported by a weak dollar, with the monthly oil-market report from the International Energy Agency revising upwardly its demand growth estimate for 2015.

The uptick comes despite the prevailing economic weakness in China, where officials are expected to announce stimulus measures in the near future.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have risen 1.3 million barrels in the week ended April 10, while analysts expected an increase of 3.5 million barrels. The report showed U.S. crude oil inventories at 483.7 million barrels end last week. Stockpiles are still at its highest in about 80 years and have been climbing for the 14th straight week since the week ended January 9.

Gasoline stocks dropped by 2.1 million barrels last week, with analysts anticipating a decline of 0.9 million barrels. Inventories of distillate, including heating fuel, rose 2.0 million barrels, with analysts anticipating an increase of 0.15 million.

Data from the oil and gas industry trade group American Petroleum Institute late Tuesday showed U.S. crude oil stocks to have risen by 2.6 million barrels last week.

Signs that U.S. shale producers are cutting back production amid a price war with OPEC have also lifted prices.

Meanwhile, the IEA revised upward its demand growth estimate for 2015 by 90,000 barrels a day to 93.6 million barrels a day. The agency said output from Saudi Arabia has jumped to record highs of 31.01 barrels a day. Output from the Organization of the Petroleum Exporting Countries is indicated to have risen 0.9 million barrels a day in March to 31.02 million a day, with record output from Saudi Arabia even as supplies from Iraq and Libya improved.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, gained $3.10 or 5.8 percent to settle at $56.45 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for May delivery scaled a high of $56.45 a barrel intraday and a low of $53.39.

On Tuesday, crude oil gained $1.38 or 2.7 percent, to settle at $53.29 a barrel, as speculations were rife of a possible production cut from the Organization of the Petroleum Exporting Countries, while anticipating a decline in U.S. output.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 98.33 on Wednesday, down from its previous close of 98.78 on Tuesday in late North American trade. The dollar scaled a high of 99.36 intraday and a low of 98.25.

The euro trended higher against the dollar at $1.0698 on Wednesday, as compared to its previous close of $1.0656 in North American trade late Tuesday. The euro scaled a high of $1.0698 intraday and a low of $1.0572.

On the economic front, a Federal Reserve report on Wednesday showed U.S. industrial production to have dropped more than expected in March. The Fed said industrial production fell 0.6 percent in March after inching up 0.1 percent in February. Economists expected production to drop by 0.3 percent.

Manufacturing activity in New York unexpectedly contracted in April, a report from the Federal Reserve Bank of New York showed Wednesday. The New York Fed's general business conditions index dropped to a negative 1.2 in April from a positive 6.9 in March, with a negative reading indicating a contraction in regional manufacturing activity.

The index turned negative for the first time since last December, surprising economists, who had expected the index to inch up to 7.0.

A report from the National Association of Home Builders on Wednesday showed homebuilder confidence rebounded rebounded more than expected in April, after a notable deterioration in U.S. homebuilder confidence in the previous month. The NAHB/Wells Fargo Housing Market Index jumped to 56 in April from a downwardly revised 52 in March. Economists expected the index to climb to 55 from a reading of 53 originally reported for the previous month.

China's gross domestic product expanded 7.0 percent on year in the first quarter of 2015, the National Bureau of Statistics said on Wednesday, coming in at 14,066.7 billion yuan. The headline figure was in line with expectations while slowing from 7.3 percent in the previous three months.

Eurozone merchandise trade surplus for February increased from last year, although weaker than expected, data from the Eurostat showed Wednesday. The euro area recorded an unadjusted trade surplus of EUR 20.3 billion in February, up from EUR 14.4 billion in the same month last year. Economists were looking for a surplus of EUR 21.0 billion.

Germany's consumer prices increased for the second straight month in March as initially estimated, final data from the statistical office Destatis showed Wednesday. Consumer prices rose 0.3 percent in March from last year, following a 0.1 percent increase in February. The annual increase matched the preliminary estimate published on March 30.

French consumer prices declined for the third straight month in March, data from the statistical office Insee showed Wednesday. Consumer prices fell 0.1 percent year-on-year in March, slower than February's 0.3 percent decrease. This was the third consecutive fall. Economists had forecast prices to remain flat in March.