Crude Oil Ends Lower After Iran Deal Is Clinched

(RTTNews) - U.S. crude oil ended lower on Thursday, after Iran and the world powers reached a deal in broad general terms which will curtail Tehran's nuclear program for uranium enrichment.

The deal requires Iran to limit its enrichment capacity and stockpile by two-thirds, and not enrich uranium over 3.67 percent for at least 15 years. Tehran has also agreed to enrich uranium at at only one plant, while the other facilities are to be converted for other peaceful uses.

The deal in Lausanne, Switzerland came about after months of protracted talks with between the two sides. The deal will see the European Union lifting economic sanctions on Iran, which has roiled the Iranian economy for long. However, the U.S. may only lift sanctions until Iran's implementation of the deal is confirmed.

However, losses for crude oil were limited by some upbeat economic data from the U.S., as first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended March 28, with claims falling to their lowest level in two months.

The claims report is seen as a key prelude to Friday's monthly jobs report for March, which could have a big impact on whether the Federal Reserve will raise interest rates this Summer.

Meanwhile, new orders for U.S. manufactured goods unexpectedly increased in February, on a jump in orders for non-durable goods more than offsetting a drop in orders for durable goods.

U.S. trade deficit narrowed much more than anticipated in February, with the value of imports registering another substantial decrease.

Light Sweet Crude Oil futures for May delivery, the most actively traded contract, dropped $0.95 or 1.9 percent to settle at $49.14 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for May delivery scaled a high of $50.45 a barrel intraday and a low of $47.05.

On Wednesday, crude oil surged $2.49 or 5.2 percent to settle at $50.09 a barrel, on increased demand for gasoline with the U.S. Energy Information Administration weekly report showing a marked decline in gasoline stocks last week.

However, the report showed U.S. crude oil inventories to have surged 4.8 million barrels in the week ended March 27, while analysts expected an increase of 3.5 million barrels. Total U.S. crude oil inventories increased to 471.4 million barrels end last week, with stockpiles at its highest in about 80 years, climbing for the 12th straight week since the week ended January 9.

Gasoline stocks dropped 4.3 million barrels last week, with analysts anticipating a decline of 1.3 million barrels.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.43 on Thursday, down from its previous close of 98.12 on Wednesday in late North American trade. The dollar scaled a high of 98.28 intraday and a low of 97.33.

The euro trended higher against the dollar at $1.0893 on Thursday, as compared to its previous close of $1.0764 in North American trade late Wednesday. The euro scaled a high of $1.0903 intraday and a low of $1.0752.

In economic news, first-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended March 28, with claims falling to their lowest level in two months, a report from the Labor Department showed Thursday. Initial jobless claims dropped to 268,000, a decrease of 20,000 from the previous week's revised level of 288,000. Economists expected claims to edge up to 285,000 from the 282,000 originally reported for the previous week.

A Commerce Department report on Thursday showed an unexpected increase in new orders for U.S. manufactured goods in February, with a jump in orders for non-durable goods more than offsetting a drop in orders for durable goods. Factory orders edged up 0.2 percent in February following a revised 0.7 percent decrease in January. Economists expected orders to fall by 0.4 percent compared to the 0.2 percent drop previously reported for the previous month.

A Commerce Department report on Thursday showed U.S. trade deficit to have narrowed much more than anticipated in February, with the value of imports registering another substantial decrease. U.S. trade deficit narrowed to $35.4 billion in February from a revised $42.7 billion in January. Economists expected the deficit to narrow slightly to $41.5 billion from the $41.8 billion originally reported for the previous month.

Elsewhere, the U.K construction sector expanded at a slower-than-expected pace in March, largely due to weaker growth of output and new orders, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed Thursday.

Nonetheless, confidence among companies rose to the highest level in over nine years, helped by improving economic fundamentals and strong order books. The CIPS/Markit construction Purchasing Managers' Index fell to 57.8 in March from 60.1 in the previous month. It was forecast to drop to 59.8.