Crude Oil Ends Above $108 On Syria, Supply Concerns

(RTTNews) - U.S. crude oil moved higher to end above the $108-mark on Thursday, after an Energy Information Administration weekly report showed U.S. crude stockpiles to have dropped much more than expected, and on supply concerns with possibilities of military action against Syria on the horizon. Oil prices also gained from some upbeat macroeconomic data out of the U.S., despite the dollar trading higher against a basket of major currencies.

Latest data from the Energy Information Administration showed U.S. crude oil inventories dropped 1.80 million barrels and gasoline stocks shed a similar 1.80 million barrels in the week ended August 30. Analysts expected crude oil inventories to ease 0.20 million barrels and gasoline stocks to shed 0.60 million barrels last week.

In some significant economic news, the ADP said private sector employment in the U.S. increased, while first-time claims for U.S. unemployment benefits fell more than expected last week. U.S. labor productivity recorded a bigger than expected upward revision in the second quarter, while activity in the U.S. service sector unexpectedly expanded at a faster rate in August, with the index at a record high.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, gained $1.14 or 1.1 percent to close at $108.37 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for October delivery scaled a high of $108.54 a barrel intraday and a low of $107.13.

Yesterday, oil dropped sharply to end below $108 ahead of the official crude inventories data with investors weighing the prospects of military action against Syria by the U.S. and its allies. Oil futures ended at its lowest level since August 26, after having dropped below $107 during the session

Late Wednesday, the API said U.S. crude inventories dropped 4.2 million barrels and gasoline stocks shed 387,000 barrels in the weekended August 30, compared with analysts' expectations for a decline of 1.3 million barrels.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.63 on Thursday, up from 82.17 late Wednesday in North American trade. The dollar scaled a high of 82.67 intraday and a low of 82.10.

The euro traded lower against the dollar at $1.3123 on Thursday, as compared to its previous close of $1.3207 late Wednesday in North America. The euro scaled a high of $1.3222 intraday and a low of $1.3112.

In economic news from the U.S., the ADP said private sector employment increased by 176,000 jobs in August compared to a downwardly revised increase of 198,000 jobs in July. Economists had been expecting the private sector to add about 180,000 jobs compared to the addition of 200,000 jobs originally reported for the previous month.

Meanwhile, a report from the U.S. Labor Department revealed that initial jobless claims dropped to 323,000 in the weekended August 31, a decrease of 9,000 from the previous week's revised figure of 332,000. Economists had been expecting initial jobless claims to edge down to 330,000 from the 331,000 originally reported for the previous week.

Separately, the U.S. Commerce Department said factory orders fell by 2.4 percent in July following a revised 1.6 percent increase in June. Economists had expected orders to decrease by about 3.4 percent compared to the 1.5 percent increase originally reported for the previous month.

With activity in the U.S. service sector unexpectedly expanding at a faster rate in August, the Institute for Supply Management's report on Thursday showed the index of activity in the sector at a record high. The ISM non-manufacturing index climbed to 58.6 in August from 56.0 in July, with a reading above 50 indicating growth in the service sector. Economists expected the non-manufacturing index to dip to a reading of 55.0. The index was at the highest since its inception in January 2008.

Meanwhile, the U.S. Labor Department said productivity increased by a revised 2.3 percent in the second quarter compared to the previously reported 0.9 percent growth. Economists expected productivity to increase by about 1.8 percent.

From the eurozone, new orders in the German manufacturing sector decreased in July after recording strong growth in the previous month, preliminary estimates released by the Federal Ministry of Economics and Technology showed. New orders received by goods producers dropped a seasonally adjusted 2.7 percent sequentially in July, reversing the revised 5 percent increase recorded in June. Economists had forecast a slower decrease of 1 percent for July, following the previous month's originally reported 3.6 percent gain.

The European Central Bank on Thursday left its interest rates unchanged for the fourth successive month in September.

Elsewhere, the Bank of England retained the asset purchase facility at GBP 375 billion and interest rate at a record low 0.50 percent.