Crude Oil Stable after Release of Bullish Inventories Report

October crude oil futures stabilized on Wednesday after the U.S. Energy Information Administration reported that inventories fell by 5.5 million barrels the week-ending August 21. Preliminary estimates called for an increase of 1.0 million barrels, but this probably changed last night after the American Petroleum Institute reported a drawdown of 7.3 million barrels.

The price action suggests that a support base may be forming since the API and EPA were better-than-expected.

December Comex Gold futures continued to slide as volatility in the Asian market dissipated. The recovery in the U.S. Dollar was primary responsible for the selling pressure in gold. The markets calmed after China introduced to stimulus measures on Tuesday. First, it cut its lending rate and second, it reduced its reserve requirement ratio. Both measures are designed to provide liquidity for the stock market and to stimulate future economic growth.

The dollar received an additional lift on Wednesday when Chinese policymakers decided to pump 140 billion yuan into the financial system. This helped calm the financial markets while strengthening the dollar. A better-than-expected increase in U.S. durable goods also helped trigger a rise in the dollar. This report showed an increase in the sale of durable goods of 2.0% versus an estimate of -0.4%.

The rising dollar and stock markets helped drive the EUR/USD lower, giving back some of the gains from earlier in the week. The GBP/USD fell in sympathy with the Euro and on the better than expected durable goods number.

The dollar pulled back a little during the session after William Dudley, president of the New York Federal Reserve said that a September rate hike is looking less compelling. When asked if the Fed will make a move this year, Dudley responded that he “really” hopes to raise rates in 2015, but “let’s see how the data unfolds before we make any statements about exactly when that might occur.”

There’s a full slate of economic reports on Thursday, starting with the Preliminary GDP at 8:30 a.m. ET. This is followed by the weekly unemployment claims report, pending home sales, and the start of the central bankers’ Jackson Hole Symposium.