Crude Oil Surges To End At Near $95 A Barrel

(RTTNews) - U.S. crude oil surged to end sharply higher on Tuesday, ahead of the weekly inventories data and the outcome of the U.S. Federal Reserve's monetary policy meet in Washington, even as the dollar trended lower against a basket of some select currencies.

Crude oil was given a further boost after OPEC Secretary General Abdalla el-Badri said the cartel may slash its output targets, while indicating crude prices to rebound by the year end. The observations were made by el-Badri after his meeting with the Russian Energy Minister in Vienna.

The American Petroleum Institute will release its oil report for the week ended September 12 later today, while the official supply data from the U.S. Energy Information Administration will be out Wednesday morning.

The focus is also on the U.S. Federal Reserve's two-day monetary policy meeting that gets underway today. It is widely expected that the Fed will reduce its monthly asset buying program by another $10 billion.

Markets also await cues from the meet as to when the Fed would likely hike interest rate. It is speculated that the Fed will start hiking rates sooner than earlier thought, perhaps as early as next Spring.

Investors also continued to monitor the situations in Iraq and Ukraine, with news reports that the U.S. military has launched airstrikes in Iraq on Monday, stepping up action against Islamic State militants.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, jumped $1.96 or 2.1 percent to close at $94.88 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for October delivery scaled a high of $95.19 a barrel intraday and a low of $92.46.

On Monday, crude oil futures ended higher after some positive U.S. economic data outweighed a pair of disappointing economic reports from China. Last week's downward revisions by the Organization of the Petroleum Exporting Countries and the International Energy Agency on global oil demand forecast had dragged down crude oil prices to the lowest in over 17 months.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.06 on Tuesday, down from its previous close of 84.25 late Monday in North American trade. The dollar scaled a high of 84.37 intraday and a low of 83.86.

The euro trended higher against the dollar at $1.2963 on Tuesday, as compared to its previous close of $1.2940 late Monday in North American trade. The euro scaled a high of $1.2995 intraday and a low of $1.2922.

In economic news from the U.S., data from the Labor Department showed producer prices were unchanged as expected in the month of August, after inching up by 0.1 percent in July. Excluding decreases in food and energy prices, core producer prices ticked up by 0.1 percent in August after edging up by 0.2 percent in the previous month. The modest increase also matched estimates.

Germany's investor confidence weakened to a level last seen in late 2012 amid concerns of rising geopolitical tensions hurting the European economy, the Centre for European Economic Research/ZEW reported Tuesday. The ZEW economic sentiment index fell to 6.9 in September from 8.6 in August. Nonetheless, the weakest reading since November 2012 was above economists' forecast of 5.

U.K. inflation slowed marginally as expected in August on drop in prices of motor fuels and food, the Office for National Statistics revealed Tuesday. Consumer prices rose 1.5 percent year-on-year in August, slower than the 1.6 percent rise in July, in line with economists' expectations.