Commodities: Crude gets a Thursday fillip higher, but downside risk remains

Prices of crude oil got a Thursday fillip higher as investors took some note of recent falls in US inventories, but nonetheless remain mindful of the black liquid's potential for further declines.

Both the government Energy Information Administration and industry American Petroleum Institute showed bigger than expected draws in US stocks of crude last week.

At 15:33 BST, Nymex-priced West Texas Intermediate crude was up 0.63% to $42.80 a barrel. Intercontinental Exchange-traded Brent added 0.98% to $45.26 a barrel.

"After falling into bear market territory -- having fallen more than 20% from a recent peak -- oil appears to have found some support on Thursday," said Oanda's Craig Erlam.

The senior market analyst said both grades of crude were buoyed by the EIA and API data, but noted that he remained aware of the potential for a further downside rush.

"While this has offered some near-term support, there's little reason at the moment to believe that oil isn't headed for further losses," he said.

The sufficiency of cartel Opec's extended cuts were doubted by many in the market, while rising output from the US, Nigeria and Libya was also an item of concern, as was the apparently continually rising US rig count.

Oil remains in the grips of supply overhang, and market insiders are highly reactive to US stores data and Opec's output pledge.

"Regardless of what’s driving these moves, the real question is how much more producers will stomach before they consider deepening the cuts?"

FXTM research analyst Lukman Otunuga commented: "With the 'bear market' in crude attracting bearish investors to the commodity like bees to honey, further downside should be expected moving forward.

"From a technical standpoint, WTI is extremely depressed on the daily charts and a breakdown below $42 should encourage a further decline towards $40."

Turning to metals, on Comex, gold up 0.47% to $1251.60 an ounce. Silver rose 0.92% to $16.59 an ounce. Copper was down 0.36% at 260.55 cents a pound.

On London Metals Exchange, three-month industrial metals were mixed. Copper was ahead 1.5% with zinc adding an impressive 3.33%. Aluminum fell 1.03% and tin shed 0.03%.