Crude Oil Ends Below $92 A Barrel

(RTTNews) - U.S. crude oil dropped for a second straight session to end at an eight-month low on Thursday, ahead of the monthly non-farm payrolls data due tomorrow with investors continuing to weigh the prospects of increased oil supply from Libya. The North African country is expected to lift its oil production and export to normal, stoking fears of oversupply even as traders mulled over the latest supply data from the U.S. indicating huge stockpiles of distillates and gasoline.

In an upbeat sign for the U.S. economy, a report from Labor Department showed first-time claims for U.S. unemployment benefits fell more than expected to a one-month low in the week ended January 4. The less volatile four-week moving average also declined from the previous week's revised average. The encouraging jobless claims benefits data also renewed speculations the Federal Reserve would continue tapering its quantitative easing program through the year.

The Energy Information Administration yesterday said gasoline stockpile surged 6.2 million barrels last week, while distillate stockpiles increased 5.8 million barrels. Analysts anticipated gasoline stockpiles to rise 2 million barrels with distillate inventories expected to increase 1.9 million barrels. Meanwhile, U.S. crude oil inventories dropped 2.7 million barrels for the week ended January 3, while analysts expected a decline of 3.3 million barrels.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, dropped $0.67 or 0.7 percent to close at $91.66 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for February delivery scaled a high of $92.93 a barrel intraday and a low of $91.24.

Yesterday, oil snapped a five-day loss to end higher with the extreme weather in the U.S. pushing up heating oil demand and prices, despite a strong dollar.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.03 on Thursday, down from its previous close of 81.07 late Wednesday in North American trade. The dollar scaled a high of 81.19 intraday and a low of 80.85.

The euro traded higher against the dollar at $1.3587 on Thursday, as compared to its previous close of $1.3575 late Wednesday in North America. The euro scaled a high of $1.3633 intraday and a low of $1.3550.

In economic news from the U.S, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits dropped more than expected in the week ended January 4. Initial jobless claims declined to 330,000, a decrease of 15,000 from the previous week's revised figure of 345,000. Economists expected jobless claims to edge down to 335,000 from the 339,000 originally reported for the previous week.

Jobless claims came in at its lowest level since dropping to 305,000 in the week ended November 30. The less volatile four-week moving average fell to 349,000, a decrease of 9,750 from the previous week's revised average of 358,750.

Consumer credit in the U.S. increased less than expected in November, a report from the Federal Reserve showed. Consumer credit rose $12.3 billion in November after jumping by $17.9 billion in October. Economists expected credit to increase by about $14.2 billion.

China's consumer price inflation eased for a second consecutive month in December to reach its weakest level in seven months, data from the National Bureau of Statistics revealed Thursday. The annual consumer price inflation fell to 2.5 percent in December from 3 percent in November. Economists anticipated a slowdown to 2.7 percent. On a monthly basis, the consumer price index rose 0.3 percent. In the whole of 2013, inflation was 2.6 percent, well below the government's target of 3.5 percent.

China's producer prices extended its decline to 22 months in December, fueling concerns over industrial overcapacity.

The European Central Bank left interest rates unchanged at a record low at the start of the year, as it battles deflationary tendencies, while a gradual recovery has become more evident in the 18-nation economy. The ECB kept the main refinancing rate unchanged at 0.25 percent on Thursday, for a second straight month following their meeting in Frankfurt. The decision was in line with economists' expectations. The marginal lending facility rate was held at 0.75 percent. The deposit facility rate was kept at zero, where it has remained since July 2012.

Meanwhile, European Central Bank President Mario Draghi in his customary post-decision press conference in Frankfurt reiterated that the 18-nation economy is set to experience a protracted period of low inflation and asserted that the bank will maintain easy policy for as long as needed.

Elsewhere in Europe, the Bank of England kept its monetary policy unchanged as policymakers closely monitor the economic recovery and developments in the U.K. labor market. The nine-member Monetary Policy Committee headed by Governor Mark Carney, maintained the key interest rate at a record-low 0.50 percent. The central bank also retained the quantitative easing at GBP 375 billion.