Crude Oil Soars To End Above $47 A Barrel

(RTTNews) - U.S. crude oil prices soared over 5 percent to end sharply higher Wednesday, after a report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have declined more than expected last week.

Crude prices were also impacted with investors focused on the most closely watched Federal Reserve meeting in years. The Federal Open Market Committee statement will be released at 2 p.m. Eastern on Thursday. Policy makers must decide whether now is the time for an interest rate hike.

A Labor Department report on Wednesday showed a modest drop in U.S. consumer prices in August, reflecting mainly a steep drop in energy prices.

With the drop in inflation, it seems likely the central bank will delay raising interest rates until at least December. The employment and inflation numbers are seen as the two key factors that guides the Fed plans for its first interest-rate hike in nearly a decade.

Early Wednesday, data from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have dropped 2.1 million barrels in the week ended September 11, while analysts anticipated an increase of 1.2 million barrels. Total U.S. crude stockpiles aggregated 455.9 million barrels end last week, at levels not seen for this time of year in the last 80 years.

Gasoline supplies rose 2.8 million barrels, while distillate stockpiles increased by 3.1 million barrels last week.

Stocks at Cushing, Oklahoma, the key delivery point for Nymex crude, dropped by 1.9 million barrels last week, to 54.5 million barrels.

Meanwhile, data from the oil and gas industry trade group, the American Petroleum Institute late Tuesday said crude supplies fell 3.1 million barrels end last week.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, surged $2.56 or 5.7 percent, to settle at $47.15 a barrel on the New York Mercantile Exchange Wednesday. This is the highest settlement since August 31.

Crude prices for October delivery scaled a high of $47.35 a barrel intraday and a low of $44.82.

On Tuesday, crude oil gained $0.59 or 1.3 percent, to settle at $44.59 a barrel, ahead of the Federal Reserve's two-day monetary policy meet, with uncertainty if the Fed will finally raise interest rates after eight years at zero.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.26 on Wednesday, down from its previous close of 95.60 in late North American trade on Tuesday. The dollar scaled a high of 95.85 intraday and a low of 95.16.

The euro trended higher against the dollar at 1.1304 on Wednesday, as compared to its previous close of 1.1269 in North American trade late Tuesday. The euro scaled a high of 1.1322 intraday and a low of 1.1215.

On the economic front, a Labor Department report on Wednesday showed a modest drop in U.S. consumer prices in August, reflecting a steep drop in energy prices. The consumer price index edged down by 0.1 percent in August after inching up by 0.1 percent in July. Economists expected prices to come in unchanged.

Homebuilder confidence in the U.S. continued to improve in September, a report from the National Association of Home Builders said Wednesday, with the housing market index reaching a near ten-year high. The NAHB/Wells Fargo Housing Market Index crept up to 62 in September from 61 in August, while economists had expected the index to come in unchanged.

Eurozone inflation slowed to 0.1 percent in August from 0.2 percent in July, final data from Eurostat showed Wednesday. The rate for August was revised down from 0.2 percent.

Inflation remains well below the European Central Bank's target of 'below, but close to, 2 percent over the medium term'.

Eurozone's labor costs increased at a slower pace in the three months ended June, figures from Eurostat showed Wednesday. Hourly labor costs climbed 1.6 percent year-over-year in the second quarter, following a 1.9 percent hike in the preceding month, revised down from 2.2 percent. In the fourth quarter last year, the rate of growth was 1.3 percent.

U.K. wages grew at the fastest pace in over six years and the unemployment rate declined in the three months to July, signaling a buildup of inflationary pressures, underpinned by household income.

Pay excluding bonuses increased 2.9 percent from the same period of last year, which was the fastest growth since early 2009, the Office for National Statistics reported Wednesday.

The unemployment rate was unchanged from the quarter ended April, but below 6.2 percent seen in the same period of last year.

UK households' finance outlook rebounded in September to the highest level in six months on lower inflation pressures, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday.

The seasonally adjusted Markit Household Finance Index rose slightly to 43.7 in September from August's eight-month low of 43.4.