Oil Falters Despite Inventory Decline As Recovery Fears Remain

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Oil prices ended lower Wednesday, recording their first quarterly loss since 2008, as concerns over a global economic recovery remained unabated, overshadowing data that showed a bigger-than-expected weekly decline in US crude inventories.

August crude oil settled down $0.31 at $75.63 a barrel on the New York Mercantile Exchange, posting a modest monthly gain but ending the quarter down 11%.

After peaking near $87 in early May, oil prices plummeted more than 20% amid economic worries to fall below $70 before staging a gradual recovery.

In its weekly update the US Energy Department's Information Administration said crude stockpiles fell 2 million barrels in the week ended June 25, steeper than a 900,000 million-barrel drop analysts had anticipated.

Late Tuesday, the American Petroleum Institute reported a decline of 3.4 million barrels in crude inventories.

Meanwhile, around 25% of oil production in the Gulf of Mexico has reportedly been shut down as Hurricane Alex headed for landfall in northern Mexico.

The greenback pulled back from its two-week high versus the euro. The European single currency recovered some ground after a European Central Bank auction slightly eased worries about the region's banking sector. European banks borrowed a less-than-forecast $161 billion, suggesting their cash needs are not as worse as feared.

Indicating continued weakness in the US labor market, payroll processor ADP said non-farm private employment increased by 13,000 jobs in June, much lower compared to an addition of about 61,000 jobs economists had anticipated. The previous month's employment growth was upwardly revised by 2,000 to 57,000.

Result of a survey from the Institute for Supply Management-Chicago revealed that manufacturing activity in the Chicago region continued to expand in the month of June. The Chicago Purchasing Managers Index showed a reading of 59.1, roughly in line with consensus expectations. Though down from 59.7 in May, the reading above 50 is indicative of growth.(Provided by RTTNews)