Commodities: Crude prices sour after spike in US inventories

Crude-oil futures were firmly on the back foot on Wednesday as the market sold the black liquid in the wake of two data sets that showed surges in US inventories last week, while defensive-asset gold firmed amid ongoing political uncertainty.

At about 15:06 GMT, Nymex-traded West Texas Intermediate was down 0.67% to fetch $51.82 a barrel, while Intercontinental Exchange-quoted Brent lost 0.45% to $54.80 a barrel.

WTI's run lower followed an American Petroleum Institute report out on Tuesday that revealed a 14.227m barrels spike in inventories last week, versus an expected build of 2.5m barrels.

This was followed by the Energy Information Administration on Wednesday stating crude stores rose 13.8m barrels to 508.6m last week. Crude prices initially fell further on the EIA figures, but soon settled back around their 15:06 GMT prices.

Oanda senior market analyst Craig Erlam further noted that OPEC and non-OPEC producers attempting to wrestle with oversupply and drive prices towards more sustainable levels.

"The problem these producers are now facing is that their efforts have been so successful that US shale producers that were previously priced out are now returning in large numbers.

"This is preventing oil getting back above $60 a barrel and instead, we’re now seeing its trading back around the lows of the range it’s held in since the start of December."

Accendo Markets' head of research, Mike van Dulken, said the fall in crude was weighing on risk appetite, adding to European and US political jitters and fresh interest in both fixed income bonds and traditional safe havens like gold.

"Gold has made a decisive breakout to $1235, increasing the probability of a bullish flag pattern towards $1280," said van Dulken.

On Comex, gold was up 0.83% to $1246.3 an ounce, with silver up 0.64% to $17.87 an ounce and copper shooting up 1.77% to 267.85 cents a pound.

Three-month industrial metals on London Metals Exchange were mostly lower, with tin and copper the worst hit.

SwissQuote opined that gold was trading above former resistance given at $1233 an ounce, with key support at $1122.

"In the long-term, the technical structure suggests that there is a growing upside momentum. A break of $1392 is necessary to confirm it."

Among agriculturals, Chicago Board of Trade-priced corn was down 0.27% to 367.5 cents a bushel, with wheat ahead 0.17% to 431.5 cents a bushel.

ICE-listed cocoa shed 0.3% to $2011 a MT, while cotton No.2 added 0.47% to 75.44 cents a pound. Live cattle ebbed 0.15% to 116.33 cents a pound.