Commodities: Crude gains amid dollar weakness, drop in US output
(ShareCast News) - Weakness in the US dollar led to a broad push higher for the commodities complex which nevertheless continued to trade in a sideways fashion near their most recent multi-year lows.
Bloomberg's commodity index rose 0.64% to 84.03 by 18:52 BST alongside a 0.57% fall in the US dollar index to 97.54.
In January 2016 Bloomberg's index hit a low of 73.49.
Against that backdrop, the latest US Department of Energy data revealed on Wednesday that commercial crude oil inventories fell for a sixth consecutive week, shrinking by 1.8m barrels for the seven days ending on 12 May (consensus: 2.5m) as refinery runs increased back above 17.0m barrels per day.
The data also revealed the first drop in US oil production since February due to falling output from Alaska, "which tends to be volatile" according to Thomas Pugh at Capital Economics.
"The price of Brent rose on the release of today's data as investors gained confidence from the simultaneous falls in stocks of crude and gasoline. OPEC will probably be glad to see a reduction in US oil output, but this will most likely be reversed soon," Pugh added.
Front month Brent crude futures were higher by 1.13% to $52.24 a barrel on the ICE.
Gains for crude and heating oil failed to boost those for natural gas, with the June 2017 contract for the latter losing 1.39% to $3.19/MMBtu.
Gold was back in fashion amid the growing political storm on Capitol Hill, with June 2017 COMEX futures gaining 1.80% to $1,258.60/oz..
COMEX copper on the other hand was slipping 0.12% to $2.5475 a pound.
The travails of the Trump administration also proved fertile ground for many soft commodities, aside from cotton, with the July 2017 CBoT contract for wheat up by 1.06% to $4.2875 a bushel and ICE traded cocoa futures 0.98% higher to $2,054 per metric tonne.
Cooton#2 on ICE on the other hand was 1.64% weaker at $7.999 a pound.