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)

Gold Eases Near $1,235 Even As Euro, Equities Down

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The price of gold slipped back near one-week low Tuesday morning even as the euro and equities eased, signaling risk aversion. In the recent past, gold was trading inversely to equities on safe haven demand amid euro zone sovereign debt issues, rising inflation and low interest rate levels.

Gold for August delivery, the most actively traded contract, was down $4.60 to $1,236.10 an ounce, after advancing to a fresh all-time high of $1,266.50 an ounce intraday Monday. China's plan to gradually remove its currency peg to the U.S. dollar initially fueled a rally in stocks and commodities yesterday.

However, analysts expect this pullback to be less severe than the previous pullback when gold dropped from $1,250 to $1,170 during May.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at a fresh all-time high of 1,307.96 tons.

Meanwhile, the U.S. dollar continued to move up from its 3-week low versus the euro and trading firm against the British pound. The greenback edged down versus the yen.

Elsewhere, the prices of silver and platinum ticked lower in morning deals.

Today, traders will look to the report on existing home sales for May from the National Association of Realtors and the house price index for April from the Federal House Finance Agency, scheduled for release later in the day, to get clues on the strength in the recovery of the economy.

The two-day FOMC meeting will begin today and the interest rate announcement is due out tomorrow. (Provided by RTTNews)