Crude Surges to Three-week High on Friendly EIA Data

Crude oil prices finished the session at a three-week high on Wednesday after a government report showed inventories rose less than expected. Also underpinning prices were supply disruptions in Libya and growing optimism that the OPEC-led output cut by major producing countries would be extended beyond the June deadline.

According to the U.S. Energy Information Administration (EIA), crude oil inventories rose 867,000 barrels in the week-ending March 24. This figure was nearly half of the 1.2 million barrel build that was expected. Traders attributed the lower build to ramped up processing by refineries after seasonal maintenance. Additionally, imports dropped and exports rose.

The EIA report also helped U.S. gasoline futures surge more than 2 percent to their highest in three weeks. It was helped by the inventories report that showed a 3.7 million-barrel drop in gasoline stocks last week, nearly 2 million barrels more than forecast.

Gold

June Comex Gold futures finished lower on Wednesday, but off its lows. It was pressured by a firmer U.S. Dollar which tends to limit demand for dollar-denominated assets. Helping to underpin the market was the start of Brexit talks, the French elections and concerns over President Trump’s economic policies.

In the U.K., Prime Minister Theresa May filed formal Brexit divorce papers to begin the process of exiting the European Union. The move triggered the start of years of uncertain negotiations that will challenge the strength and endurance of the European Union.

U.S. Treasurys

U.S. government debt prices were higher on Wednesday as yields fell. Trading was light as investors assessed the impact of fresh economic data while digesting the formal start to Brexit. The yield on the benchmark 10-year Treasury notes fell to around 2.393 percent, while the yield on the 30-year Treasury bond was also lower at 3.998 percent.

U.S. Stocks

The major U.S. stock indexes finished mixed on Wednesday with the benchmark S&P 500 and tech-based NASDAQ Composite closing higher and the blue chip Dow closing lower.

The S&P 500 Index benefitted from a 1.2 percent rise in the energy sector. Oil stocks rose sharply higher after the release of friendly weekly EIA data.

Economic News

It was a relatively quiet day as far as major reports were concerned. In the U.S., weekly mortgage applications were flat. Pending home sales data showed a 5.5 percent increase in February. This was well above the expected 2.3% boost. Last month’s data showed a 2.8% decline.