Crude Plunges On ADP, Oil Supplies; North Korea, Iran, ECB Watched

Crude oil plunged on Wednesday after the U.S. ADP jobs report, which showed less-than-expected hiring in the private sector in March, darkening the outlook for demand on oil from the world’s top consumer. U.S. oil inventories rose to their highest since 1990.

Crude remained weak today, trading near the lowest in over a week. The U.S. private sector added 158K jobs in March compared with 237K added in February, darkening the outlook for Friday’s main jobs data which is seen as an indicator for economic strength.

Meanwhile, the spike in U.S. crude stockpiles to their highest since 1990, triggered further downside pressures on oil process. Crude inventories rose 2.71 million barrels last week to 388.6 million barrels, according to yesterday's EIA report.

Inventories were projected to rise 2.1 million barrels; gasoline inventories fell 572,000 barrels to 220.7 million last week, the lowest since December, according to the EIA. Distillates, including diesel and heating oil, fell 2.3 million barrels to 113 million.

Adding to the downside pressures on oil prices today is the strengthening U.S. dollar amid worries from weakening U.S. growth. The dollar index is found trading above the 83.00 at the time of writing, while the euro is at 1.2830 as demand on safe haven is advancing.

Crude oil is trading around the $94.45 a barrel level, compared with the opening at $94.46, while the highest is at $94.62 and the lowest is at $94.23

Brent is trading around $107.49 a barrel, after rising 0.35% or $0.38.

However, oil prices find support today from Bank of Japan’s decision to adopt an aggressive monetary policy to end 15 years of deflation in the world`s third largest economy. BoJ’s new leadership decided to double the monthly bond purchases to 7 trillion yen a month.

Following the announcement, the yen weakened, falling above the 95.00 levels from the opening at 93.04

Losses may also be limited as investors are anxiously watching the latest developments from North Korea . Pyongyang is again testing the U.S.’s patience announcing it is prepared to attack the United States. “What the market will be looking for now will be supplementary signs like the building up of troops on the ground for example, something more concrete before pricing in this risk”, said Ric Spooner from CMC Markets in Sydney.

Investors are also watching the meeting between Iran and the West to talk about Tehran`s nuclear program, which may provide some support to prices. Talks between Iran and six major powers are scheduled to take place on Friday and Saturday in Almaty, Kazakhstan.

Natural gas is trading at $3.913 per cubic feet after rising 0.33%

Heating oil is trading at $3.0068 a gallon after rising 0.16%

Gasoline is trading at $2.9196 a gallon after rising 0.19%

Investors will also focus today on policy decisions made by the European Central Bank and Bank of England. While the U.K. is expected to keep its monetary policy unchanged, markets are anxious to see if the ECB is preparing for a rate cut in the coming months to support the economy.