Level 2

Commodities: Crude prices tumble after US inventories build; Brent peeps below $50

By Andrew Schonberg

Date: Wednesday 22 Mar 2017

Commodities: Crude prices tumble after US inventories build; Brent peeps below $50

(ShareCast News) - Crude-oil futures are strongly lower Wednesday afternoon in the aftermath of two separate reports -- one this afternoon and the other last night -- that again showed rising US stocks of the black liquid.
At about 15:21 GMT, Nymex-priced WTI crude was down 1.51% to $47.51 a barrel. Intercontinental Exchange-traded Brent was 1.59% lower at $51.15 a barrel, after peeping below the $50 level at one point during the session.

The latest build in inventories comes amid a chronic global glut of crude. The market remains anxious about cartel Opec's output pledges from last year, and US shale production.

Price pressure on oil was anticipated after Tuesday night's American Petroleum Institute said US crude inventories rose 4.5m barrels in the week to 17 March.

This was followed by Wednesday's US Energy Information Administration report which revealed crude inventories rose 5m barrels in the last week.

Jasper Lawler, senior market analyst at London Capital Group, noted Brent's nudge below the psychologically important $50 a barrel level.

"A surprise 4.95m build in EIA crude oil inventories adds to the concern the supply glut could take longer to reverse," he said.

FXTM research analyst Lukman Otunuga noted that, from a technical standpoint, the fact oil markets remained subdued despite dollar's vulnerability continued to highlight how bone-deep the oversupply concerns have become.

"A breakdown below $48 on WTI Crude could encourage sellers to send prices lower towards $47.00," he said.

Turning to metals, on Comex, gold was up 0.19% to $1248.9 an ounce, with silver down 0.19% to $17.55 an ounce and copper down 0.04% to 261.75 cents a pound.

Mike van Dulken, head of research at Accendo Markets, opined that the nil-yielding yellow metal had found resistance at $1249.

This, he said, was "by way of 9-month falling highs and the 200-day moving average.".

Lawler continued, adding that the precious yellow metal had been the obvious beneficiary of the latest bout of uncertainty.

"The rise in the price of gold began March 15 when the Fed raised rates, pre-dating the stock sell-off this week," he said.

"Gold is a hedge against uncertainty but also does well during periods when interest rates look like staying lower for longer, typically when stocks do well too."

Finally, three-month industrial metals on London Metals Exchange were mixed. Zinc and copper were down by more than 1%, while aluminum and tin made minor gains below 0.3%.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page