With little new developments in the geopolitics front, the market's focus returned to oil market. The selloff of energy prices, driven by the less-than-expected drop in crude oil inventory and the surprising increase in gasoline stockpile, dragged equities and commodity currencies lower. The front-month WTI crude oil contract plunged to a 2-week low of 50.09 before settling at 50.44, down -3.76%, while the Brent contract fell to as low as 52.58 before ending the day at 3.57%. The RBOB gasoline contract accelerated its 6th day of decline, losing -3.04%, at close. Wall Street ended the day in red, with the exception of the tech-heavy Nasdaq. Weakness in oil prices dragged the energy sector index down by -1.4%. The DJIA and S&P 500 indices lost -0.58% and -0.17% respectively. Commodity currencies plunged with Canadian dollar and Australian dollar suffering the most. Both have lost around -1.2% against US dollar over the past 2 days. NZDUSD dropped -0.55%, though much of the losses were recovered in Asia session Thursday. The greenback also strengthened across other major currencies, with the DXY index rebounding for a 3-week low made in the prior day. US Treasuries pulled back after recent rally. 2-year yields steadied at 1.18% while 10-year yields added +5 points to 2.22%.
The DOE/EIA reported that total crude oil and petroleum products stocks dropped -1.66 mmb to 1331.07 mmb in the week ended April 14. Crude oil inventory slid -1.03 mmb to 532.34 mmb with stocks declining in 3 out of 5 PADDs. The withdrawal came in weaker than consenss of -1.47 mmb. Cushing stock decreased -0.78 mmb to 68.64 mmb while utilization rate gained +1.9% to 92.9%. For refined oil products, gasoline inventory added +1.54 mmb to 237.67 mmb as demand was down -0.56% to 9.22M bpd. The market had anticipated a -1.47 mmb in gasoline stockpile. Production decreased -1.34% to 9.79M bpd while imports jumped +72.75% to 0.84M bpd during the week. Distillate inventory dropped -1.96 mmb to 148.27 mmb as demand sank -9.88% to 4.18M bpd. Production added +1.78% to 5.15M bpd while imports soared +41.53% to 0.17M bpd during the week.
While the macroeconomic events were scarce on Wednesday, the Fed's latest Beige Book indicated that economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March. The the pace of expansion was "equally split between modest and moderate". On the labor market situation, the report noted that it "remained tight, and employers in most Districts had more difficulty filling low-skilled positions, although labor demand was stronger for higher skilled workers". It added that "modest wage increases broadened" with "bigger increases for workers with skills that are in short supply". A larger number of firms noted "higher turnover rates and more difficulty retaining workers". Yet, the wage pressure remained modest and has not yet significantly passed to selling prices. As the report suggested, "input prices generally increased at a modest rate and outpaced gains in selling prices, which rose only slightly".
In the Eurozone, ECB's Executive Board member Benoit Coeure suggested that "the balance of economic risk in Europe is by and large balanced, by and large flat" and he does not "see risks as tilted to the downside anymore". By contrast, Executive Board member Peter Praet was more cautious, reiterating his view that "risks are still tilted to the downside". However, both affirmed that the bond purchase program would continue until the end of the year.
For the day ahead, US' Philly Fed manufacturing index probably felt o 25.6 in April from 32.8 a month ago. The weekly initial jobless claims might have increased to 241K in the week ended Aril 15, from 234K in the prior week. The leading indicators index probably gained +0.2% in March, slowing from +0.6% previously.