Crude Oil Soars To End Above $99 A Barrel

(RTTNews) - U.S. crude oil soared to end at a one-week high on Tuesday, ahead of the official inventory data and outcome from the two-day U.S. Federal Reserve policy review meet later this week. Investors also weighed the developments in Ukraine with Russia annexing the Crimea region after an overwhelming vote on Sunday.

Investors await the Fed's decision on stimulus tapering, with expectations the central bank will trim its asset purchase by $10 billion to $55 billion per month at the end of its two-day meeting that began this morning.

In economic news from the U.S., a Commerce Department report showed housing starts with some further downside in February , after reporting a sharp drop in new residential construction in the previous month. Meanwhile, a Labor Department report on Tuesday showed modest increase in U.S. consumer prices in February, with an increase in food prices offsetting a drop in energy prices.

Russian President Vladimir Putin made it clear that he would not seek annex all of Ukraine. Addressing lawmakers in Moscow, Putin claimed Crimea as a part of Russia, but signaled he would leave the rest of Ukraine to its own devices. Putin's remarks before a joint session of the Russian parliament indicated that the separatist Crimea region would rejoin Russia following Sunday's referendum.

Meanwhile, it is widely expected that the soft sanctions on Russia following the Crimea region of Ukraine voting to join Russia will not result in supply interruption from the region.

Light Sweet Crude Oil futures for April delivery surged $1.62 or 1.7 percent to close at $99.70 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for April delivery scaled a high of $99.78 a barrel intraday and a low of $97.75.

Yesterday, crude oil ended sharply lower after the U.S. and EU imposed some soft sanctions on Russia after Crimea's voted to join Russia with an overwhelming 97 percent of the people voting for it.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.41 on Tuesday, up from its previous close of 79.39 late Monday in North American trade. The dollar scaled a high of 79.54 intraday and a low of 79.31.

The euro traded a tad higher against the dollar at $1.3925 on Tuesday, as compared to its previous close of $1.3922 late Monday in North America. The euro scaled a high of $1.3941 intraday and a low of $1.3882.

In economic news from the U.S., a Commerce Department report on Tuesday showed housing starts with some further downside in February , after reporting a sharp drop in new residential construction in the previous month. Housing starts edged down by 0.2 percent to a seasonally adjusted annual rate of 907,000 in February. Economists expected housing starts to climb to 910,000 in February from the rate originally reported for the previous month.

Meanwhile, building permits, an indicator of future housing demand, jumped 7.7 percent to an annual rate of 1.018 million in February from the revised January rate of 945,000, the U.S. Commerce Department said. Economists expected building permits to climb to a rate of 960,000 from the 937,000 originally reported for the previous month.

A Labor Department report on Tuesday showed a modest increase in U.S. consumer prices in February, with an increase in food prices offsetting a drop in energy prices. The consumer price index edged up by 0.1 percent in February, matching the increase seen in January. The uptick in prices also matched economist estimates.

From Europe, economic expectations for Germany worsened in March, burdened by the Crimea crisis, while the assessment of current situation hit the highest level since 2011, survey data from the Centre for European Economic Research/ZEW revealed Tuesday. The economic confidence index dropped more-than-expected to 46.6 in March from 55.7 in February. The March score was the weakest since August 2013. It was forecast to fall less markedly to 52.

Eurozone's merchandise trade with the rest of the world resulted in a surplus in January, with balance of foreign trade, on an unadjusted basis, showed a surplus of 0.9 billion euros, compared to a deficit of 5.4 billion euros in the corresponding month last year. Economists expected a surplus of 13.9 billion euros for January. In December 2013, the bloc recorded a trade surplus of EUR13.8 billion.

Investors will be focused on the American Petroleum Institute weekly report due later today, and the official U.S. crude oil inventories data for last week due Wednesday. Analysts expect a significant build in stockpiles for a second straight week.