Forexpros – Crude oil futures trimmed losses to trade little changed in choppy trade during U.S. morning hours on Thursday, after a U.S. government report showed oil supplies declined significantly more-than-expected last week.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD87.70 a barrel during U.S. morning trade, easing up 0.1%.
It earlier rose by as much as 1.5% to trade at USD88.97 a barrel, the highest since May 30.
The August crude contract traded at USD87.44 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories declined by 4.3 million barrels in the week ended June 29, compared to expectations for a decline of 1.9 million barrel decline. U.S. crude supplies dipped by 0.1 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 382.9 million barrels as of last week.
Total motor gasoline inventories increased by 0.2 million barrels, compared to expectations for a gain of 0.6 million barrels, after rising by 2.07 million barrels in the preceding week.
Oil prices jumped earlier after China’s central bank cut interest rates for the second time in two months in an effort to boost slowing growth in the world’s second largest economy.
The People’s Bank of China unexpectedly announced that it had lowered its benchmark interest rate by 0.31% to 6.00% from 6.31% effective July 6.
China is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Global central banks remained in focus. The European Central Bank cut its benchmark interest rate to a record low 0.75% in July, in a bid to bolster faltering growth in the region.
Market sentiment came under pressure after ECB President Draghi said that the economic outlook faces downside risks, adding that indicators for the second quarter point to weakening growth in the euro zone.
Draghi said that there was probably a “renewed weakness in economic growth” in the last three months, with “heightened uncertainty”.
Draghi also refused to speculate on the chances of a third round of Long Term Refinancing Operations, in which it would provides cheap loans to European banks in an attempt to encourage them to lend.
Meanwhile, the Bank of England left its key lending rate at 0.5% but lifted its asset-purchase program by GBP50 billion pounds earlier in the day, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.
Elsewhere, in the U.S., official data showed that the number of individuals filing for initial jobless benefits in the week ending June 30 fell by 14,000 to a seasonally adjusted 374,000, compared to expectations for a decline of 3,000 to 385,000.
The previous week’s figure was revised up to 388,000 from a previously reported 386,000.
The data came after payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 176,000 in June, easily surpassing expectations for an increase of 105,000.
The previous month’s figure was revised down to a gain of 136,000 from a previously reported increase of 133,000.
A separate report showed that service sector activity in the U.S. grew at a slower rate than expected in June, but still expanded for the 30th consecutive month.
Investors had been eyeing Thursday’s U.S. data amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 1.5% to trade at 101.25 a barrel, with the spread between the Brent and crude contracts standing at USD13.55.
London-traded Brent hit USD102.30 a barrel earlier in the day, the highest since June 7.
Brent prices jumped on news that Norway’s top oil producer Statoil would start shutting down production at its North Sea fields after its dispute with the unions over pensions hit a deadlock.
The company said the shortfall in production would amount to 1.2 million barrels per day of oil equivalent.
Norway is the world’s eighth largest oil exporter.
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