Oil prices slumped Wednesday as US oil inventory rose much more than expected, durable goods orders improved less than expected and concerns over the Eurozone crisis remained. The front-month contract for WTI crude oil plunged to 104.67, the lowest level in 4 days, before settling at 105.41, down -1.79%, while the equivalent Brent crude contract dropped -1.10%. Gold erased most gains achieved over the past days and declined -1.60% during the day.
According to the DOE/EIA weekly report, total crude oil and petroleum products stocks gained +6.32 mmb to 1061.47 mmb in the week ended March 23. Crude stockpile increased +7.10 mmb to 353.39 mmb, compared with consensus of a +0.6 mmb increase and API's estimate of a +3.6 mmb gain. This was driven by a huge 5.98 mmb build at PADD III. Cushing stock alone rose +1.04 mmb to 39.56 mmb.
Economic data in the US showed signs of easing too. Durable goods orders climbed +2.2% m/m in February following an upward revision of January's readin to -3.7%. The market had, however, anticipated a rise of +2.9%. Excluding transportation, the reading rose +1.6%, also short of consensus of a +2.0% gain, despite an improvement from a -3.0% drop a month ago. Economic indicators are gauges for the Fed to decide on the monetary policy. In response to comments from the Fed Chairman Bernanke that monetary easing should continue for the job market to improve further. St. Louis Fed President Bullard stated that the central bank should not feed oil shock with monetary easing.
The European Commission said that, although the debt problems in the 17-nation region appeared to have eased temporarily, Greece needs to implement 'painful' austerity measures to bring the country's fiscal health back on track. It's also a necessary condition for the debt-ridden country to stay in the Eurozone. Ahead of the EU leaders' meeting tomorrow, a draft statement revealed that European governments are preparing for a 1-year increase in the ceiling on rescue aid to 940B euro.
Concerning the dataflow, Economic confidence probably edged +0.1 point higher to 94.5 om March. Consumer confidence and industrial confidence might have stayed unchanged at -19 and -5.8 respectively in March. Final reading for the US GDP is expected to stay unchanged at +3.0% in 4Q11. Initial jobless claims probably rose +2K to 350K in the week ended March 24.