Commodities: Oil futures bounce on US inventory data

Oil futures reversed declining fortunes on Thursday, posting an uptick in wake of US inventory data, while selected base metal contracts registered gains during European trading.

US commercial crude oil inventories increased by 4m barrels during the week ending on 15 January, according to the Energy Information Administration, the statistical arm of the country's Department of Energy. Despite the increase, traders were encouraged that stockpiles at the oil delivery hub of Cushing, Oklahoma, rose by only 191,000 barrels; a figure below levels many market commentators had feared.

Gasoline stockpiles jumped by another 4.6m barrels, although those of other products such as distillates slipped by 1m barrels. Imports of oil fell by 409,000 barrels a day in the latest week, the EIA added.

In response, the WTI front-month futures contract regained its premium to global proxy benchmark Brent. At 1718 GMT, Brent was up 6.06% or $1.69 to $29.57 per barrel, while WTI rose 5.54% or $1.57 to $29.92 per barrel. Despite a positive session, both benchmarks remain within range of 12-years lows.

Earlier in the session, chief executive officer of Nasdaq stock exchange Bob Greifeld described the ongoing market turmoil as an “overreaction.”

Speaking at the World Economic Forum (WEF) in Davos, Switzerland on Thursday, Bob Greifeld opined that once “emotion” has left the market, global businesses would do well.

"How did the low oil price turn into bad news? Better to have it at $26 per barrel than $126. And China's 6.9% growth may be disappointing, but it's still growing," he added.

"There's always a psychology about the markets, you can't underestimate where the animal spirits are…and if people want to believe in a certain direction they will.”

Elsewhere, selected base metals headed higher on the London Metal Exchange. At 1635 GMT, three-month delivery futures contracts of primary aluminium (up 0.1%), copper (up 1.1%), lead (up 1.2%), nickel (up 0.9%) and zinc (up 0.7%) headed higher. However, tin futures (down 0.2%), benefitting overnight from production cutbacks in China, shed the previous session’s gains.

Meanwhile, precious metals pulled back from previous highs. On the COMEX, the front-month gold futures contract posted a decline of 1.10% or $12.20 to $1,094.00 an ounce, while spot gold was 0.45% or $4.99 lower at $1,095.93 an ounce.

COMEX silver fell 1.38% or 19 cents to $13.97 an ounce, while spot platinum was down by 0.21% or $1.75 to $819.15 an ounce.

Liz Grant, senior account executive at Sucden Financial, said, “Some stability and calm returned to the markets following the panic sell offs seen on Wednesday. On the LME, it was overall a quiet day and turnover in the three-month contracts remained low. Copper gradually clawed its way back above $4,400 levels with the rest of the complex also moving into positive territory as equity markets recovered."

Finally, agricultural commodity futures returned to positive territory. CBOT corn (up 0.27%), wheat (up 1.11%), ICE cocoa (up 1.89%), cotton (up 0.69%) and CME live cattle (up 2.34%) headed higher in early trading calls stateside.