Crude Futures on Downhill Slide as Inventory Rises Again

August 31, 2016 6:53AM CDT

The energy sector led the commodities futures markets on Wednesday, the last trading day in August. Crude oil futures prices are on a sliding downhill after another week of rising inventories from a government agency report.

The October contract in crude oil futures prices was down 3.09 percent at 44.93 a barrel after an earlier low of 44.83 after the report. According to analysts, prices remain on track for a monthly gain of 10 percent.

The Energy Information Administration (EIA) said inventories rose by 2.3 million barrels last week. Analysts had expected an increase of 900,000 barrels. Preceding the EIA data was Tuesday’s report from the American Petroleum Institute, which showed stockpiles adding 942,000 barrels last week.

Crude futures dropped despite reports that Iraq supported an oil output freeze agreement at next month’s informal OPEC meeting. However, prices were falling ahead of any of the inventory data, and analysts said strength in U.S. dollar index futures prices contributed to the drop. The energy sector of commodities futures markets has been seeing falling prices for most of the week as market volatility and quiet summer trading sessions weigh on prices.

The September contract in U.S. dollar index futures slowed considerably and was up just .05 percent at 96.085 on Wednesday in mid-morning trading.

Commodities futures markets participants contemplated other U.S. economic reports on Wednesday. The Chicago Purchasing Manager’s Index for August was released at 51.5 compared to most economists’ expectations of a reading of 54. The drop was attributed to a slowdown in economic activity in the summer months, according to analysts, as well as a large setback in order backlogs and new orders.

July Pending Home Sales rose 1.3 percent, far above forecasts of a rise of 0.7 percent, according to the National Association of Realtors. It was the highest level in more than 10 years. Economists say that homebuyers are still frustrated by the lack of inventory and high price of homes for sale.

Companies added 177,000 positions for the month, just above Wall Street expectations for 175,000, according to the latest report from ADP and Moody's Analytics.

Most commodities futures markets are on the sidelines, waiting for Friday’s August Employment Report, which is expected to show the U.S. economy added 180,000 jobs during the month.

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