Commodities: Oil futures slide as US inventory data hits home

Oil futures shed spectacular overnight gains on Thursday, after US crude inventory data finally weighed on trading sentiment.

At 1551 GMT, the Brent front month futures contract fell 2.26% or 93 cents to $40.14 per barrel having risen above $41 overnight. Concurrently, WTI futures fell 1.75% or 67 cents to $37.62 per barrel.

US government data released late on Wednesday showed the country’s crude stockpiles rose in line with analysts’ expectations. Stocks increased 3.9m barrels to a total 521.9m barrels in the week to 4 March, according to the Energy Information Administration.

Total motor gasoline stockpiles fell 4.5m barrels and distillate fuel stocks dropped 1.1m barrels. Production figures were broadly unchanged.

With many analysts pondering whether the oil market had found a bottom, Goldman Sachs said the recent surge in prices was not sustainable and the rout was not over by any means.

“In the current supply-driven market, demand hasn’t really changed, it takes lower prices to push and keep supply below demand to create a deficit. As a result, higher prices are much harder to sustain in a supply-driven market since supply is primed to return with higher prices,” the investment bank advised its clients.

Away from oil markets, precious metals headed higher in wake of a marginally weaker dollar. The COMEX gold April futures contract rose 0.66% or $8.30 to $1265.70 an ounce cancelling out overnight declines, while spot gold was up 1.02% or $12.82 to $1,266.05 an ounce.

COMEX silver rose 1.39% or 21 cents to $15.58 an ounce, while spot platinum also rose 0.38% or $3.70 to $983.10 an ounce, staying below the psychological $1,000 an ounce level breached on Monday for the first time since October 2015.

However, headline three-month base metal futures headed lower across the London Metal Exchange board, with the exception of tin (+0.9%) contract, while copper was broadly flat. However stateside, the COMEX copper contract was 0.54% or $1.20 lower at $225/lb.

Finally, agricultural commodity futures were largely in positive territory. CBOT corn (+0.49%), wheat (+1.07%), CME live cattle (+1.08%) and ICE cocoa (+0.63%) rose in early US trading calls, but ICE cotton (-1.06%) failed to keep up with other headline contracts.