Forexpros –
Forexpros – Crude oil futures traded lower Wednesday, despite a U.S. government report indicating a slightly smaller-than-expected increase in U.S. oil supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.95 a barrel during U.S. afternoon trade, down 0.15%.
It earlier fell by as much as 0.85% to trade at a daily low of USD105.81 a barrel.
Crude prices traded at USD106.82 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 increased by 1.8 million barrels in the week ended March 9, missing estimates for a 2.0 million barrel increase. U.S. crude supplies rose by 0.8 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 347.5 million barrels as of last week, the highest since September.
Total motor gasoline inventories decreased by 1.4 million barrels, compared to expectations for a 1.0 million barrel decline, after falling by 0.4 million barrels in the preceding week.
Oil prices traded slightly lower before the supply data as a broadly stronger U.S. dollar weighed. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.30% to trade at 80.88.
A stronger dollar reduces the appeal of dollar denominated commodities thus makes them less attractive as an alternative investment.
The dollar’s gains were fuelled by an upbeat assessment of the U.S. economy by the Federal Reserve, which reduced expectations for a third round of U.S. monetary easing by the central bank.
In other news, concerns over the short-term global energy demand outloo depressed prices after the International Energy Agency said in its monthly report earlier that global oil demand is expected to grow 0.9% in 2012, as a subdued economic backdrop and high oil prices “both restrain any upside momentum for consumption.”
Meanwhile, ongoing tensions between Iran and the U.S. and Israel also remain in focus. The U.S. has reportedly asked Russia to warn Iran that it has a last chance in negotiations expected in April to avoid military strikes against its nuclear program.
Iran and Western nations have been locked in a stand-off in recent months over Tehran’s nuclear program.
The U.S. and its allies are concerned that the program is aimed at developing a nuclear weapon, and have stepped up sanctions against the country in recent months, including an European oil import ban. Iran insists the nuclear program is for peaceful purposes.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery traded higher 0.08% to 125.69 a barrel, with the spread between the Brent and crude contracts standing at USD19.74.
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