Commodities: Oil futures hold above $31/bbl even as US stockpiles rise

Oil futures stayed well clear of $31 per barrel mark on Wednesday, despite registering declines for much of the Asian and early European session.

At 1619 GMT, Brent front-month oil futures contract was up 1.01% or 32 cents to $32.12 per barrel, while WTI rose 0.13% or four cents to $31.49 per barrel over yet another volatile session, as US Energy Information Administration data indicated the country’s crude stockpiles jumped by 8.4m barrels over the week ending on 22 January.

Gasoline inventories also increased by 3.5m barrels, as did those of distillate fuels up by 4.1m, but peak winter demand sent calls on heating oil higher as inventories of the latter fell by 4m.

James Hughes, chief market analyst at GKFX, said, “The recovery in the oil price was somewhat surprising, with the rally happening after oil inventory figures. The numbers show that the glut of oil damaging prices is growing larger week by week and with the potential for more Iranian oil coming into the already flooded system global markets look like they are going to be drowning in oil for a little longer yet.”

Elsewhere, headline base metal futures headed higher on the London Metal Exchange. During late afternoon trading, three-month futures contracts of copper (up 0.2%), lead (up 0.3%), nickel (up 1.2%), tin (up 1.4%) and zinc (up 0.4%) were firmly in positive territory.

Meanwhile, precious metals slipped into negative territory ahead of the conclusion of US Federal Reserve’s monetary policy meeting. Last month, the Fed decided to raise interest rates for the first time in nearly a decade by 25 basis points. While the central bank's Federal Open Market Committee is expected to keep rates unchanged at 0.50%, investors will be looking closely at the accompanying statement for clues on the timing of the next hike.

On the COMEX, the front-month gold futures contract fell 0.36% or $4.00 to $1,116.20 an ounce while spot gold was 0.26% or $2.92 lower at $1,116.99 an ounce. Yann Quelenn, market strategist at Swissquote, "Gold's short-term upside move continues. In the long-term, the underlying downtrend continues to favour a bearish bias. A break of the resistance at $1,223 is needed to suggest something more than a temporary rebound."

COMEX silver fell 0.82% or 12 cents to $14.45 an ounce, but spot platinum still rose 0.67% or $5.88 to $880.38 an ounce.

Finally, agricultural commodity futures were largely in negative territory. CBOT corn (down 0.07%), CBOT wheat (down 1.65%), ICE cocoa (down 1.59%) and cotton (down 0.59%) headed lower in early trading calls stateside.