Crude Oil Plunges Over One-Percent on Bearish Supply News

Crude oil futures plunged on Thursday following the release of a bearish supply report. The market traded through a short-term bottom to its lowest level since August 27. The January futures contract dropped to $43.01, down over 1.0%.

The catalyst for the move was a government report that showed a seventh consecutive weekly build in U.S. crude stockpiles. According to the U.S. Energy Information Administration, crude inventories rose by 4.2 million barrels to 487 million during the week-ended November 6. Analysts were looking for an increase of 1 million barrels. Stockpiles are nearing the modern day record high above 490 million barrels reached in April.

The EIA also said that crude stocks at Cushing, Oklahoma delivery hub rose by 2.237 million barrels, the biggest weekly increase since March.

Losses were likely limited by a bigger-than-expected drop in gasoline stocks. According to the EIA, inventories fell by 2.1 million barrels, compared to trader estimates for an 807,000 barrel drop.

Worries about an interest rate hike by the Fed in December and the drop in crude oil helped drive December Comex Gold futures into its lowest level since July 24. Gold prices reached a low of $1073.00, slightly lower than the July bottom at $1073.70.

An early session rally by the EUR/USD failed after European Central Bank Mario Draghi blamed the currency’s strength since the bottom in April as one driver for a “weakening” outlook on inflation.  Clearly, the ECB would like to see the Euro lower, but sellers were scarce this week as the market neared 1.0600 amid speculation that after the Fed raises rates in December, it may soften its expectations for the economy going forward and the prospects for another interest rate hike.

The GBP/USD rallied early in the session on follow-through buying, following Wednesday’s mixed U.K. labor market data. Buyers were unable to hold on to gains and the Forex pair drifted slightly lower. Later today, Monetary Policy Committee member Haldane is scheduled to speak. Traders will be looking for guidance as to the timing of the next Bank of England interest rate hike.

In other news, U.S. weekly Unemployment Claims rose to 276K, above the 270K estimate and matching last week’s figure. Speaking at a Fed conference today, Fed Chair Janet Yellen said it is critical for the central bank to assess how monetary policy works in a post-crisis world. She did not offer any new evaluation about the economy.