Commodities: Oil futures head sideways on US inventory data, IEA comments

Oil prices headed sideways on Wednesday, with Brent and WTI futures alternating between losses and gains for much of the European session.

The US Department of Energy’s statistical arm – the Energy Information Administration – reported the country’s crude oil inventories rose by 10.4m barrels to a total of 518m barrels last week, well above the 3.6m barrel increase expected by analysts.

However, on the upside, the International Energy Agency said US oil production fell last week by about 25,000 barrels per day to just over 9m bpd, down from a peak of 9.6m bpd in April, soothing concerns about a supply glut.

With Saudi Arabia commenting that it would work with other producers to limit oil market volatility, selected analysts opined that there were hints the market had bottomed out. At 1723 GMT, the Brent front month futures contract was down 0.30% or 11 cents to $36.70 per barrel, while the WTI fell 0.06% or two cents to $34.38 per barrel.

Chris Beauchamp, senior market analyst at IG, said, “US crude inventories spiked to the highest level since April 2015, heightening fears that supply will remain significantly higher than demand for some time yet. Unfortunately oil prices have a historical penchant for moving inversely to US inventories, and thus as long as they cannot shift the near record high stockpiles, the hopes of a big rally in crude seems some way off.”

Away from oil markets, precious metals returned to positive territory. The COMEX front-month gold futures contract was up 0.73% or $9.00 at $1,239.80 an ounce, while spot gold was up 0.63% or $7.76 to $1,239.91 an ounce.

COMEX silver rose 1.48% or 22 cents to $14.98 an ounce, but spot platinum fell 0.41% or $3.85 to $934.70 an ounce.

Headline base metal futures were largely higher across the London Metal Exchange board. At 1635 GMT, three-month futures contracts of primary aluminium (+0.6%), nickel (+2.2%), lead (+1.4%), tin (+1.1%) and copper (+1.7%) headed upwards, with latter rising to its highest levels in over three months.

Liz Grant, senior account executive at Sucden Financial, said, "LME metals rose across the board with copper moving up to challenge $4,800/t area. Tin, which has been fundamentally strong for some time was given a further boost to $16,300/t when a strong earthquake was reported in Indonesia.

"As the session continued, the early momentum in stocks and crude oil receded, which, coupled with a slightly firmer dollar took some of the shine off base metals."

Finally, agricultural commodity futures were on largely in positive territory. CBOT corn (+0.07%), wheat (+0.62%), ICE cocoa (+0.68%) and cotton (+0.59%) futures headed higher, but the CME live cattle (-0.49%) contract slipped in early trading calls stateside.