Oil Extends Drop On High Supplies; Market Crash

Oil......
Crude oil futures extended drop in the Asia electronic trades today on bigger-than-expected increase in last week’s U.S. crude supplies and a slowdown in private-payrolls growth. Investors were also cautious on the European Central Bank’s policy decision due later Thursday, as well as Friday’s U.S. jobs data for trading cues.
Asian markets were down Thursday tracking a negative lead from Wall Street, with a stronger yen hitting the Japanese market ahead of the Bank of Japan’s meeting outcome.
Focus was on the Bank of Japan’s policy meeting outcome due later Thursday. Expectations for fresh easing measures are high, as it will be the first meeting under new Gov. Haruhiko Kuroda, who is committed to realizing the bank’s 2% inflation target.
U.S. stocks fell sharply Wednesday, with the benchmark indexes taking their worst hit in more than five weeks, after labor-market data disappointed ahead of Friday’s nonfarm payrolls report. After a 136.65-point drop, the Dow Jones Industrial Average finished at 14,550.35, down 111.66, or 0.8%.
Today, crude for May delivery is trading down 6 cents at $94.39 per barrel on the New York Mercantile Exchange. It fell $2.74, or 2.8%, to settle at $94.45 a barrel yesterday. Tracking the most-active contacts, prices marked their lowest close since March 22.
The U.S. Energy Information Administration reported on Wednesday a climb in crude supplies that was more than the market expected. Crude supplies rose 2.7 million barrels to 388.6 million for the week ended March 29. Analysts polled by Platts expected a 2.5 million-barrel climb.
Prices for oil were already falling after the American Petroleum Institute report late Tuesday that showed crude supplies jumped 4.7 million barrels last week.
And overall, the supply figures also underscored demand concerns in the wake of recent weak manufacturing data in the U.S. and Europe.
On the economic front yesterday, the U.S. service industries grew in March at the slowest pace in eight months. ISM’s nonmanufacturing index fell to 54.4% from a 12-month high of 56% in February. And Automatic Data Processing Inc. reported that private-payroll growth slowed in March, posting its smallest gain since October.
Also bearish on oil was the statement by the president of the Federal Reserve Bank of San Francisco. The Federal Reserve could start tapering its $85 billion-a-month asset-purchase plan by the summer, said John Williams, president of the Federal Reserve Bank of San Francisco on Wednesday. However, the Fed has said in March it would continue the purchase program until it sees “substantial” improvement in the labor market.
MCX April crude oil futures may open today’s session near Rs 5225 levels with resistance near Rs 5245 levels and support near Rs 5170 levels.
Source by Commodity Insights