London
Oil traded near the lowest closing price in two weeks as concerns about volatility in global markets offset an unexpected drop in US inventories.
Futures in New York dropped 0.7 per cent after earlier gaining as much as 1.3 per cent. American Petroleum Institute data on Tuesday showed an unexpected decrease in US stockpiles, while on Wednesday US equity futures fell and the dollar rose. Investors are watching whether government inventory data confirms a decline when released later.
Crude is struggling to extend last month’s largely dollar-driven gains on speculation that US output will impede efforts by the Organisation of Petroleum Exporting Countries to drain a glut. Goldman Sachs Group Inc. stuck to its bullish call on commodities, saying the recent global equity sell-off only bolsters its view that raw materials are set to perform well in the months ahead.
“Investors are a bit mixed today, which makes sense after we saw the huge risk-off mode at the start of the week,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “Yesterday’s inventory data showed a different picture, which triggered a small recovery and now we’re waiting for today’s number.”
API Surprise
West Texas Intermediate for March delivery was 41 cents lower at $62.98 as of 12:19pm in London, after dropping 1.2 per cent on Tuesday to the lowest since Jan. 19. Total volume traded was about 6 per cent above the 100-day average.
Brent for April settlement fell 24 cents to $66.62 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.91 to April WTI.
The API was said to report US crude stockpiles slid 1.05 million barrels last week, with storage also shrinking at tanks in the key hub of Cushing, Oklahoma. That compares with a forecast of nationwide inventories rising by 3.15 million barrels in a Bloomberg survey.
