Crude Oil Surges To End Above $104 A Barrel

(RTTNews) - U.S. crude oil surged to end sharply higher on Wednesday, recouping much of the losses recorded in the last few days when investors mulled over the impact of the partial shutdown of the U.S. Government on oil demand. Oil snapped a three-day loss, with investors largely ignoring an Energy Information Administration weekly oil report that showed U.S. crude stockpiles to have jumped more than expected last week.

Oil prices made gains with the dollar continuing to weaken against a basket of major currencies after data from payroll processor ADP showed non-farm private employment to have risen less than forecast, lifting hopes of an extended run for the Federal Reserve's quantitative easing program.

Crude also found further support on reports that the southern leg of TransCanada's Keystone pipeline construction would be completed this month, which could possibly reduce oil glut at the U.S. delivery hub.

The weekly oil report from the Energy Information Administration showed U.S. crude oil inventories to have moved up by 5.50 million barrels and gasoline stocks up 3.50 million barrels in the week ended September 27. Analysts expected U.S. crude oil inventories to add 2.5 million barrels and gasoline stocks to shed 0.70 million barrels last week.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, surged $2.06 or 2 percent to close at $104.10 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for November delivery scaled a high of $104.23 a barrel intraday and a low of $101.43.

Yesterday, oil extended losses for a third session as investors monitored the consequences of the partial shutdown of the U.S. Government on oil. The dollar trended lower following the shutdown with the Congress and the Senate failing to reach a consensus on the budget and debt.

The American Petroleum Institute late Tuesday said U.S. crude oil inventories jumped 4.55 million barrels and gasoline stocks added 3.26 million barrels in the week ended September 27.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.91 on Wednesday, down from 80.18 late Tuesday in North American trade. The dollar scaled a high of 80.28 intraday and a low of 79.78.

The euro traded higher against the dollar at $1.3582 on Wednesday, as compared to its previous close of $1.3526 late Tuesday in North America. The euro scaled a high of $1.3605 intraday and a low of $1.3508.

In a report that may take on increased importance due to the likely delay of the government report, payroll processor ADP's report on Wednesday showed private sector employment in the U.S. to have increased less than expected in September. The report showed private sector added 166,000 jobs in September compared to a downwardly revised increase of 159,000 jobs in August. Economists expected private sector employment to increase by about 180,000 jobs compared to the addition of 176,000 jobs originally reported for the previous month.

Meanwhile, the Asian Development Bank (ADB), on Wednesday slashed its economic growth forecast for developing Asia, citing moderate economic activity in China and India as well as widespread concerns that possible tapering of U.S. stimulus program could impact growth in the region. In an update to its flagship annual publication Asian Development Outlook, ADB revised down its 2013 gross domestic product growth forecast for the region to 6 percent from 6.6 percent predicted in April. For 2014, the growth is now projected at 6.2 percent, down from 6.7 percent in April. In 2012, GDP rose 6.1 percent.

From the eurozone, a survey by Markit showed that the growth in the construction sector in the U.K. unexpectedly slowed in September. The headline construction purchasing managers' index fell to 58.9 in September from a near six-year high of 59.1 in August. Economists had forecast an increase in the index to 59.5.

Meanwhile, the European Central Bank retained its refi rate at a record low 0.50 percent, as widely expected.