Crude Oil Rebounds To End Sharply Higher On Russia Sanctions

(RTTNews) - U.S. crude oil rebounded to end sharply higher Thursday, on supply concerns after the European Union's latest round of sanctions on Russia for its involvement in eastern Ukraine which comes into force tomorrow. Investors also mulled the Energy Information Administration's weekly oil report on Thursday that showed U.S. crude stockpiles to have dropped last week, albeit less than expected.

Meanwhile, President Barack Obama said the U.S. will also announce additional sanctions to support its European allies, fueling fears of disruption in oil supplies from Russia.

Crude oil rallied from a 17-month low Thursday morning amid concerns over a likely fall in oil demand, after the OPEC slashed its 2015 growth forecast for oil. After OPEC yesterday, the International Energy Agency today cut its global oil demand forecast for the year, citing slowing purchases from China and Europe.

Additionally, the Organization of the Petroleum Exporting Countries cut its average supply forecast for Russia to 10.51 million barrels of oil per day in 2015, compared to the projections of 10.53 million barrels of oil per day in 2014.

Data from the U.S. Energy Information Administration showed crude stockpiles to have declined by a less than expected 1.0 million barrels last week.

In some disappointing economic news, a report from the Labor Department on Thursday showed initial jobless claims in the U.S. rose unexpectedly in the week ended September 6. A report from China showing a bigger than expected slowdown in consumer price inflation has also added to recent concerns about the outlook for the world's second largest economy.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, jumped $1.16 or 1.3 percent to close at $92.83 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for October delivery scaled a high of $92.99 a barrel intraday and a low of $90.43.

On Wednesday, crude oil futures ended sharply lower after the Organization of the Petroleum Exporting Countries cut its 2015 forecast for oil demand growth.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.20 on Thursday, up from its previous close of 84.20 late Wednesday in North American trade. The dollar scaled a high of 84.34 intraday and a low of 84.07.

The euro trended higher against the dollar at $1.2940 on Thursday, as compared to its previous close of $1.2917 late Wednesday in North American trade. The euro scaled a high of $1.2951 intraday and a low of $1.2898.

In economic news from the U.S., data from the Labor Department showed initial jobless claims to have climbed to 315,000 in the week ended August 30, an increase of 11,000 from the previous week's revised level of 304,000. Economists expected claims to decline to 300,000 from 302,000 in the previous week.

Elsewhere, inflation in China slowed more than expected in August, as producer prices declined for the 30th consecutive month, providing leeway for the implementation of additional stimulus to offset the weakness in property sector.

Consumer price inflation in China slowed to a four-month low of 2 percent in August, the National Bureau of Statistics reported Thursday. Inflation in August was forecast to ease moderately to 2.2 percent from the 2.3 percent in July.

Markets also await the outcome of the U.S. Federal Reserve's two-day policy meet scheduled to take place on September 16 - 17. It is widely expected the Federal Reserve will cut its monthly bond-buying program by $10 billion, with expectations of probable clues as to when it may hike interest rates.