Portfolio

Commodities: Crude prices continue to rise on surprise US inventories drop

By Digital Look

Date: Thursday 11 May 2017

Commodities: Crude prices continue to rise on surprise US inventories drop

(ShareCast News) - Prices for the crude-oil futures continued their drive higher on Thursday thanks to surprise falls in US-inventories reported this week, although some in the market remain cautious heading to Opec's late May meeting.
At 15:30 BST, Nymex-priced West Texas Intermediate crude was up 1.14% to $47.87 a barrel. Intercontinental Exchange-traded Brent was up 1.15% to $50.80 a barrel.

Price of the precious black liquid have been under pressure thanks to a long-running supply glut, with Opec output pledges see US shale production rise and lumpy US stores data.

The latest API and EIA figures showed bigger than expected draws last week, pleasing traders.

"Crude oil prices have continued to build on their gains of the past couple of days after US inventories showed a sharp drop of 5m barrels," said Michael Hewson of CMC Markets UK.

"Further noise from Algeria and Iraq that there is a broad consensus to extend the oil cuts for six months is also helping to support prices," said chief market analyst Hewson.

Some in the market remain cautious on whether Opec would continue its production pledge beyond this month, with the cartel due to hold its next meeting on 25 May.

"A disappointing report (today) from Opec about higher production appears to have taken the edge off some of the rebound," he noted.

Oanda senior market analyst Craig Erlam was another who pinned today's black-liquid price gains to the latest sets of inventories data.

"Still, it's early to say whether this move has lifted oil from a lower range that it appeared to have entered into or provided the opportunity for temporary reprieve."

Erlam added that Brent and WTI were respectively finding some resistance about the $51 and $48 marks.

"A move above here could signal a sharper move to the upside. If it holds, it may suggest that momentum remains to the downside," said Erlam.

Meanwhile, on Comex, gold was up 0.39% to $1223.7 an ounce. Silver rose 0.3% to $16.26 an ounce, and copper gained 0.7% to 251.2 cents a pound.

On the London Metals Exchange, three-month industrial metals were mostly lower. Zinc fell 0.46%, aluminum shed 0.27% and copper eased 0.21%. Tin was flat.

"Copper prices have managed to stage a bit of a rebound in the past day or so and that seems to be helping support the mining sector, though iron ore prices have continued to slip," said Hewson.

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