Investing.com - Crude oil futures held on to losses on Wednesday, as investors shrugged off a U.S. government report showing a slightly smaller-than-expected increase in U.S. oil supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.95 a barrel during U.S. morning trade, slumping 0.7%.
It earlier fell by as much as 0.85% to trade at a daily low of USD105.81 a barrel.
Crude prices traded at USD106.82 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 1.8 million barrels in the week ended March 9, below expectations for a 2.0 million barrel increase. U.S. crude supplies rose by 0.8 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 347.5 million barrels as of last week, the highest since September.
Total motor gasoline inventories decreased by 1.4 million barrels, compared to expectations for a 1.0 million barrel decline, after falling by 0.4 million barrels in the preceding week.
Oil prices were mildly lower before the supply data as a broadly stronger U.S. dollar weighed. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.38% to trade at 80.94, the highest since January 18.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
The dollar’s gains were fuelled by an upbeat assessment of the U.S. economy by the Federal Reserve, which reduced expectations for a third round of U.S. monetary easing by the central bank.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Concerns over the short-term global energy demand outlook also weighed after the International Energy Agency said in its monthly report earlier that global oil demand is expected to grow 0.9% in 2012, as a subdued economic backdrop and high oil prices "both restrain any upside momentum for consumption."
Meanwhile, ongoing tensions between Iran and the U.S. and Israel also remain in focus. The U.S. has reportedly asked Russia to warn Iran that it has a last chance in negotiations expected in April to avoid military strikes against its nuclear program.
Iran and Western nations have been locked in a stand-off in recent months over Tehran's nuclear program.
The U.S. and its allies worry the program is aimed at developing a nuclear weapon, and have stepped up sanctions against the country in recent months, including a European oil-import ban. Iran says its nuclear program is for peaceful purposes.
The situation has left market participants anxious about a supply disruption in the Strait of Hormuz, a major oil shipping channel, or a military conflict. Either outcome could send the price of oil skyrocketing, according to analysts.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was down 0.2% to trade at 125.41 a barrel, with the spread between the Brent and crude contracts standing at USD19.46.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.95 a barrel during U.S. morning trade, slumping 0.7%.
It earlier fell by as much as 0.85% to trade at a daily low of USD105.81 a barrel.
Crude prices traded at USD106.82 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 1.8 million barrels in the week ended March 9, below expectations for a 2.0 million barrel increase. U.S. crude supplies rose by 0.8 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 347.5 million barrels as of last week, the highest since September.
Total motor gasoline inventories decreased by 1.4 million barrels, compared to expectations for a 1.0 million barrel decline, after falling by 0.4 million barrels in the preceding week.
Oil prices were mildly lower before the supply data as a broadly stronger U.S. dollar weighed. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.38% to trade at 80.94, the highest since January 18.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
The dollar’s gains were fuelled by an upbeat assessment of the U.S. economy by the Federal Reserve, which reduced expectations for a third round of U.S. monetary easing by the central bank.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Concerns over the short-term global energy demand outlook also weighed after the International Energy Agency said in its monthly report earlier that global oil demand is expected to grow 0.9% in 2012, as a subdued economic backdrop and high oil prices "both restrain any upside momentum for consumption."
Meanwhile, ongoing tensions between Iran and the U.S. and Israel also remain in focus. The U.S. has reportedly asked Russia to warn Iran that it has a last chance in negotiations expected in April to avoid military strikes against its nuclear program.
Iran and Western nations have been locked in a stand-off in recent months over Tehran's nuclear program.
The U.S. and its allies worry the program is aimed at developing a nuclear weapon, and have stepped up sanctions against the country in recent months, including a European oil-import ban. Iran says its nuclear program is for peaceful purposes.
The situation has left market participants anxious about a supply disruption in the Strait of Hormuz, a major oil shipping channel, or a military conflict. Either outcome could send the price of oil skyrocketing, according to analysts.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was down 0.2% to trade at 125.41 a barrel, with the spread between the Brent and crude contracts standing at USD19.46.