Analysts expected initial jobless claims to fall, but today’s data showed 19,000 more Americans filing for unemployment benefits for the first time, taking the total number to 479,000. Continuing claims declined by 34,000 to 4,537,000, which, however, was not enough to keep the markets in the positive. The update sent the Dow Jones futures down by 0.4%, while the UK’s FTSE 100 was flat after making gains in early trade.
Yesterday’s closely watched inventories report from Energy Information Administration (NYSEMKT:EIA) showed a decline of 2.8 million barrels in US crude stockpiles last week. However, gasoline inventories added 729,000 barrels and distillates, which include diesel and heating oil, increased by 2.2 million barrels. Total inventories of crude oil and oil products now stands at the highest level since 1990 at 1.125 billion barrels.
Today’s surge in US dollar following yesterday’s update on the ISM (Institute of Supply Management) non-manufacturing index further weakened crude, making the dollar-denominated asset more expensive for holders of other currencies, denting demand. The ISM index improved from 53.8% in June to 54.3% in July, signalling an expansion of the service sector.
September Brent Crude moved down to US$81.46/barrel, while US light, sweet crude slipped to US$81.91/barrel on the New York Mercantile Exchange (NYMEX).