Commodities: Crude extends gains as EIA confirms US stores drop

Crude-oil futures got a mild shove on a sun-soaked Wednesday afternoon in London as fresh official data showed a draw in US stores of the black liquid last week.

The just-issued Energy Information Administration numbers showed a 2.5m barrel draw in US stores, after industry American Petroleum Institute figures last night showed a 2.7m drop.

At 15:40 BST, Nymex-priced West Texas Intermediate crude was up 0.6% to $43.77 a barrel. Intercontinental Exchange-traded Brent added 0.3% to $46.16 a barrel.

The prices of both grades of crude had risen immediately after the EIA data was published.

"Within a few minutes of the announcement, oil started to give back some of the gains it made because of the spike higher," observed David Madden, market analyst at CMC Markets UK.

"Concerns about over-supply will hang over the oil market, and the dwindling demand from Asia is playing on traders’ minds too," he added.

"Earlier today, Iran said OPEC should consider a deeper cut to the reduction in production, but as we have seen, they do not always work."

The EIA data followed yesterday's price tank by the black liquid as traders sold on renewed fears of oversupply.

Their concerns were stoked by burgeoning output from Libya and Nigeria and also US shale pumping concerns, accompanied by another rise in US rig counts over the previous weekend.

Oil remains in the grips of a chronic supply glut, and market insiders are highly reactive to US stores data and Opec's output pledge. The latter's curb extension into 2018 been seen as insufficient.

"The oil rally still refuses to materialise, despite this afternoon’s bigger than expected draw in crude stockpiles and a surprising fall in gasoline inventories," said IG chief market analyst Chris Beauchamp.

"Nonetheless, bulls have been defending the $43 area stubbornly for the past 24 hours, hoping that they can build a base around this point and capitalise on overly bearish positioning among investors," said Beauchamp.

Turning to metals, on Comex, gold up 0.12% to $1245.0 an ounce. Silver fell 0.32% to $16.37 an ounce. Copper was 1.28% ahead at 260.5 cents a pound.

On London Metals Exchange, three-month industrial metals were mostly down. Copper fell 1.17%, tin shed 0.23% and zinc lost 0.04%. Aluminum was about even.