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Commodities: Crude firmly ahead after US inventories fall more than expected

By Digital Look

Date: Wednesday 10 May 2017

Commodities: Crude firmly ahead after US inventories fall more than expected

(ShareCast News) - Crude-oil futures are pricing firmly higher on Wednesday after two sets of closely watched US data showed bigger than expected draws in the country's inventories last week.
The government's Energy Information Administration said today that crude stores fell a bigger than expected 5.3m barrels last week. Traders were expecting a fall of 1.6m barrels.

This followed industry American Petroleum Institute data yesterday revealing a 5.8m barrels drop, against forecasts for a reduction of 1.8m.

At 15:38 BST, Nymex-priced West Texas Intermediate crude was up 1.66% to $46.64 a barrel. Intercontinental Exchange-traded Brent was up 1.44% to $49.43 a barrel.

About 12 minutes later, WTI was up 2.29% to $46.93 a barrel and Brent was up 2.11% to $49.76 a barrel.

Michael Hewson, chief market analyst at CMC Markets UK, said today's EIA data should help support the current rebound in crude.

"While it wouldn't be a surprise to see some sort of rebound it seems likely that we might see some resistance start to come in at around the $50 a barrel level," said Hewson.

Crude prices have suffered amid a global oversupply of the black liquid. Opec's output pledges are due to expire, and traders are looking to its 25 May meet for a production curb extension.

Reports also had it that Iraq and Algeria were favouring some form of Opec cut extension, while Saudi Arabia said it would cut back on its exports to Asia.

Naeem Aslam, chief market analyst at ThinkMarkets UK, added the worrisome matter about crude was "that no one really knows how long it will take for the oil glut to fade".

Meanwhile, on Comex at about 15:29 BST, gold was up 0.57% to $1223.0 an ounce. Silver rose 0.98% to $16.23 an ounce, and copper eased 0.16% to 249.40 cents a pound.

"Gold has managed to establish a little bit of a base just above the $1,200 area on the back of a slightly weaker US dollar," said Hewson.

SP Angel noted in its morning view that gold was trading up and around $1222 after seven sessions of losses, and amid reports over North Korea proceeding with a nuclear test.

"Copper prices are down 0.5% today heading towards the weakest level since the start of the year with the latest weekly exchange data showing money managers cut bullish LME copper positions to the lowest in in almost six months," said SP Angel.

On the London Metals Exchange, three-month industrial metals were mixed. Copper rose 0.47% and zinc gained 0.89%. Aluminum dropped 0.48% and tin slipped 0.13%.

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