Crude Oil Ends Higher Ahead Of ECB Meet Outcome

(RTTNews) - U.S. crude oil rebounded to end higher on Wednesday, ahead of the European Central Bank meet outcome on Thursday, even as news reports indicate a definite proposal before the central bank for additional stimulus.

A Wall Street Journal report, citing people familiar with the matter, said a new bond-buying program has been proposed for the eurozone economy, with monthly bond purchases of about 50 billion euros or US$58 billion for a minimum period of one year.

The ECB has been stubbornly holding off on full-scale quantities easing until now, but some dreadful economic data and the threat of deflation could see some additional stimulus on Thursday.

Crude oil prices remained steady above $47 a barrel early Wednesday despite lingering concerns of global supplies outpacing demand. For now, OPEC's biggest producers are happy to cripple non-OPEC competition with cheap oil, keeping any rally from the 6-year lows in check.

A Bloomberg report said a key Iran oil official indicated his nation will be fine with crude oil at $25. Bijan Namdar Zanganeh, the Islamic Republic of Iran's oil minister, says "there will yet again be no threat posed to Iran's oil industry," even if the price falls another $20 or so. He said Iran has no plan to hold an emergency OPEC meeting to discuss the dramatic recent drop in oil prices.

OPEC's strategy of derailing the U.S. shale oil industry may be starting to work. BHP this morning said it would cut shale output, and a number of major names in the energy sector have slashed jobs in anticipation of fewer projects this year.

Still, BNP Paribas became the latest in a string of banks to lower its outlook for crude oil price.

"We see little scope for avoiding a large stock build in the first half of 2015 and therefore anticipate weak prices," analysts at BNP Paribas said in a report.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, jumped $1.31 or 2.8 percent, to settle at $47.78 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for March delivery scaled a high of $48.20 a barrel intraday and a low of $46.55.

On Wednesday, crude oil plummeted to end over five percent lower after the International Monetary Fund slashed its 2015 global economic growth forecast and with China's economy growing at its slowest in about 25 years.

Markets await U.S. crude oil inventories data from industry group the American Petroleum Institute later today Wednesday. An official U.S. government update follows on Thursday. Analysts expect an increase of more than 2 million barrels from the week before.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 92.87 on Wednesday, down from its previous close of 93.00 late Tuesday in North American trade. The dollar scaled a high of 93.09 intraday and a low of 92.15.

The euro trended higher against the dollar at $1.1594 on Wednesday, as compared to its previous close of $1.1551 late Tuesday in North American trade. The euro scaled a high of $1.1674 intraday and a low of $1.1542.

On the economic front, new residential construction in the U.S. saw a significant increase in December with housing starts nearly offsetting the drop seen in the previous month, a report from the Commerce Department showed Wednesday,.

The report said housing starts jumped 4.4 percent to an annual rate of 1.089 million in December after tumbling 4.5 percent to a revised 1.043 million in November. Economists expected housing starts to climb 1.3 percent to 1.041 million in December from the 1.028 million originally reported for the previous month.

Meanwhile, the report also said building permits fell 1.9 percent to an annual rate of 1.032 million in December from the revised November rate of 1.052 million. Building permits, an indicator of future housing demand, had been expected to climb 2.4 percent to 1.060 million from the 1.035 million originally reported for the previous month.

The U.K. unemployment rate fell to a six-year low in the September to November period but the fall in unemployment was the slowest since September 2013, data from the Office for National Statistics showed Wednesday.

The jobless rate in U.K. dropped to 5.8 percent during the September to November period from 6 percent in the June to August period. Economists had forecast a rate of 5.9 percent. This was the lowest rate since August 2008.

The leading index for Germany increased in November, figures from the Conference Board showed Wednesday. The leading index rose 0.4 percent month-over-month in November, reversing the 0.1 percent decline in October.

The Bank of England's rate-setting body unanimously decided to leave the key rate unchanged for the first time since August after two policymakers abandoned their call for a rate hike. The Monetary Policy Committee voted 9-0 to retain the base rate at 0.50 percent, the minutes showed Wednesday. All members were also in favor of maintaining the size of quantitative easing at GBP 375 billion.

Eurozone house prices increased for the second straight quarter in the three months to September 2014, preliminary data from Eurostat showed Wednesday. House prices rose 0.6 percent quarter-on-quarter, slower than a 0.9 percent increase in the previous three months. House prices in the EU grew 1.1 percent in the third quarter from the previous three months and rose 2.3 percent from the corresponding period of the previous year.

Meanwhile, the Bank of Japan also kept its monetary policy unchanged and lowered its near-term inflation forecast as falling oil prices hamper efforts to lift inflation. The bank voted to maintain its monetary base at an annual pace of about JPY 80 trillion.