Oil Holds on to Gains

The US Energy Information Administration reported Wednesday that domestic crude stockpiles fell by 3.327 million barrels during the week ended August 18^th, following drawdowns in each of the prior seven weeks. This was slightly smaller than the forecast 3.450 million barrel stockpile decline. Apart from crude, gasoline inventories fell by 1.223 million barrels, while distillate stocks remained unchanged for the week.

Analysts were projecting a 643,000 barrel equivalent fall in gasoline stocks and a drop of 93,000 barrels for distillates. Even though US production rose, energy traders were more focused on developments tied to Tropical Storm Harvey and its potential to hamper oil and gas production in the Gulf of Mexico. The US National Hurricane Center has issued a warning stating the storm could evolve into a hurricane by Friday. In the meantime, Brent crude futures were last seen around the $52.55-mark per barrel.

After a disappointing reading in July, Euro Area economic momentum accelerated in August as a stronger than expected performance from the manufacturing sector offset a slight dip in services activity. IHS Markit’s monthly composite PMI for the currency bloc came in at 55.8 compared to the 55.7 recorded back in July. The Markit survey is carried out across the manufacturing, services and construction sectors, and is a leading gauge of the state of the economy.

The manufacturing sector did bulk of the heavy lifting climbing from 56.6 to 57.4 in August, easily topping expectations of a decline to 56.3 for the period. The services component of the index was slightly weaker, slipping from 55.4 in July to 54.9. Investors cheered the continuation of the recent strength in the economy, sending EURUSD briefly back above key resistance standing at 1.1800.