Commodities: Oil futures rise on US inventory data, Kuwaiti comments

Oil futures reversed declines on Wednesday, following bullish comments from OPEC member Kuwait and an unexpected decline US crude inventories.

Kuwait’s Governor for the Organization of Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, said she was confident both OPEC and non-OPEC members will go along with plans to cut crude output at the upcoming meeting in Qatar on 17 April.

Later in the session, US Department of Energy’s statistical arm – the Energy Information Administration – said American crude oil inventories fell 4.9m barrels in the week to April 1, compared with analysts' expectations for an increase of a 3.1-3.2m barrels.

Crude stocks at the US oil delivery hub of Cushing, Oklahoma, rose 357,000 barrels, the EIA added. Concurrently, US crude imports fell by 446,000 barrels per day, owing to weather issues in the Houston Ship Channel in the state of Texas last week.

At 1742 BST, the Brent front month futures contract was up 5.25% or $1.99 to $39.86 per barrel, while WTI futures gained 5.21% or $1.87 at $37.76 per barrel.

Meanwhile, investment bank Morgan Stanley said capital expenditure budget cuts in the oil and gas space had only just begun, and were beginning to filter through from the ‘upstream’ end of the business into mid and downstream activities.

There had been about $90bn of recent deferrals announced, the bank pointed out, with its proprietary capex tracker pointing to about a 20% year-on-year fall in mid/downstream spend in 2016 for the first time ever.

Away from oil markets, the precious metals rally came to a halt as traders booked profits. The COMEX gold June futures contract fell 0.41% or $5.10 to $1224.50 an ounce, while spot gold was down 0.71% or $8.71 to $1,222.64 an ounce.

COMEX silver fell 0.30% or five cents to $15.07 an ounce, while spot platinum also fell 0.89% or $8.50 to $943.55 an ounce.

Headline base metal futures endured mixed fortunes on the London Metal Exchange. At 1635 BST, three-month futures contracts of primary aluminium (-0.3%) and zinc (-1.0%) were in negative territory, but lead (+0.9%), tin (+0.8%) and copper (+0.4%) headed higher.

Liz Grant, senior account executive at Sucden Financial, said, "The influence of a slightly stronger US dollar early on saw LME prices under a little pressure during the London morning but once again there was a lack of momentum and business activity remained in the doldrums.

“Following the intraday rally in crude oil, there were modest gains in LME prices but turnover remained low across the board.”

Finally, agricultural commodity futures made a positive start to the US session. CBOT corn (+0.21%), ICE cocoa (+0.62%), cotton (+0.31%) and CME live cattle (+1.35%) futures headed up in early trading calls stateside.