Forexpros – bsp;- Crude oil futures were flat to lower Thursday, despite a surprise U.S. inventory drop and an improved U.S. labor market.
On the New York Mercantile Exchange, light sweet crude futures for March settlement traded at USD100.69 a barrel during late U.S. trade giving back 0.06%.
It earlier climbed to USD102.23 a barrel adding 1.5% to trade at the highest level since last Thursday.
Weakness in the U.S. dollar helped lift crude oil prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.36% to trade at 80.39.
Dollar weakness generally lifts commodity prices, as it increases their appeal as an alternative asset and makes dollar priced commodities less expensive for holders of other currencies.
Crude prices traded at USD101.20 pre inventory data release from the U.S. Energy Information Administration.
The U.S. EIA stated that U.S. crude inventories dropped by 3.4 million barrels in the week ended January 13th surprising investors who expected a 2.9 million barrel increase. U.S. crude supplies climbed 5.0 million barrels the previous week.
Crude prices gained support as yields fell on all maturities as Spain auctioned EUR7.97billion of two, three, and four year notes in its first sale of medium and long term debt since losing its AAA rating last week.
Spain sold EUR6.6billion of bonds maturing in 2016, 2019 and 2022 beating the maximum target of EUR4.5billion. Yields on the 2019 and 2022 dropped, but borrowing costs increased on the 2016’s.
The European Central Bank fueled the optimism by stating that it has a whole range of unconventional measures to manage the debt crisis.
Initial U.S. jobless benefit claims plummeted 50,000 to 352,000 in the week ending January, 14th. This crushed the median analyst’s forecast of 384,000, increasing hopes that the world’s largest economy is on the rebound.
European Union foreign ministers plan to meet on January 23rd to decide on Iranian sanctions that could include an oil embargo adding tension to the trading day.
In a related report Wednesday, Morgan Stanley stated, “If Iranian tensions escalate into production disruptions, prices are likely to surge materially higher.”
Elsewhere, on the ICE Futures Exchange, Brent oil futures for March delivery eased higher 0.11% to trade at USD110.81 a barrel, up USD10.09 on its U.S. Counterpart.
This over USD10.00 spread is near historic highs. The two contracts traditionally trade within USD1.00 of each other.
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