Forexpros – Crude oil futures held on to sharp losses on Wednesday, shrugging off a report showing that U.S. crude supplies declined significantly last week, as market sentiment continued to be dominated by fears that the debt crisis in the euro zone was worsening.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD95.78 a barrel during U.S. morning trade, tumbling 2.3%.
It earlier fell by as much as 2.6% to trade at USD95.38 a barrel, the lowest since November 21, when prices fell to USD95.23 a barrel.
Crude prices traded at USD95.76 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 fell by 6.2 million barrels in the week ended November 18, blowing past expectations for a decline of 0.5 million barrels.
U.S. crude supplies fell by 1.1 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 330.8 million barrels as of last week, remaining close to the upper limit of the average range for this time of year.
Total motor gasoline inventories increased by 4.5 million barrels, outstripping expectations for a 1.0 million barrel gain, after rising by 1.0 million barrels in the preceding week.
Oil prices came under broad selling pressure after Germany’s Treasury auctioned just EUR3.64 billion of 10-year government bonds with the average yield set at 1.98% in an auction earlier. Total bids for German debt fell short of the maximum amount available by 35%, the worst demand on record.
The auction came after preliminary data showing that the euro zone manufacturing purchasing managers’ index slumped to the lowest level since July 2009 in November, falling to 46.4 from 47.1 in October.
Manufacturing output in Germany also dropped to a 28-month low, underlining fears that the euro zone could be slipping into a recession.
Separately, China’s HSBC preliminary manufacturing purchasing managers’ index fell to a contractionary reading of 48.0 in November, down from 51.0 in October.
It was the lowest level since March 2009, renewing fears over a ‘hard landing’ for the world’s second largest oil consumer.
Energy traders pay close attention to manufacturing numbers, as they are used to gauge future oil demand growth.
A stronger U.S. dollar also contributed to losses. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied 1.01% to trade at 79.20.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery fell 1.66% to trade at USD107.25 a barrel, with the spread between the Brent and crude contracts standing at USD11.47 a barrel.
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