Commodities: Oil sees mild recovery on US inventory data

Oil futures stemmed declines on Wednesday, as US crude inventory data served as a counterweight to Saudi Oil Minister Ali Al-Naimi’s recent observation of there being no prospect of production cuts.

Brent and WTI April futures rose as US Department of Energy’s statistical arm – the Energy Information Administration – noted that the country's gasoline inventories fell last week, for the first time since November.

Headline EIA data pointed to increase of 3.5m barrels in the last week to a total of 507.6m, compared with analysts' expectations for an increase of 3.4m barrels. Gasoline stocks fell by 2.2m barrels, compared with analysts' expectations for a 1 to 1.1m barrels drop.

However, crude stocks at the US oil delivery hub of Cushing, Oklahoma rose by 333,000 barrels, the EIA added. At 1915 GMT, the Brent was up 2.95% or 98 cents to $34.25 per barrel, while WTI was 0.44% or 14 cents higher at $32.01 per barrel.

Speaking at IHS CERA Week in Houston, USA on Tuesday, Al-Naimi restated Saudi Arabia's case for “maintaining output” premised on demand picking up excess crude over the medium-term.

Meanwhile, Nigeria suggested it would be in favour of an oil production freeze initiative put forward by Saudi Arabia, Russia, Venezuela and Qatar last week but Iran described the idea as "ridiculous" after initially having welcomed the move.

Elsewhere, Fitch Ratings lowered oil price assumptions it uses to rate energy companies, reflecting its view that prices were “increasingly unlikely” to recover this year.

In a note to clients, the ratings agency said its new base case is for Brent and WTI oil prices to average $35 per barrel in 2016. It had previously expected oil to average $45. However, Fitch’s long-term base case price assumptions remain unchanged at $65.

Away from oil markets, precious metals continued to post upticks. The COMEX front-month gold futures contract was up 1.77% or $21.60 at $1,244.20 an ounce, while spot gold was up 0.80% or $9.80 to $1,236.65 an ounce.

COMEX silver rose 0.88% or 14 cents to $15.42 an ounce, but spot platinum fell 0.41% or $3.87 to $940.63 an ounce.

Headline base metal futures saw a mixed afternoon on the London Metal Exchange. At 1635 GMT, three-month futures contracts of nickel (down 0.6%), lead (down 0.8%) and tin (down 0.2%) headed lower, but copper (up 0.1%) and primary aluminium (up 1.2%) headed higher.

Liz Grant, senior account executive at Sucden Financial, said, “Concerns for global growth continue to mount. As the London day progressed, LME trading remained choppy and price activity was mixed with aluminium and zinc recovering the earlier losses during the afternoon sessions. However, turnover was moderate at best.”

Finally, headline agricultural commodity futures were on a mixed patch. CBOT corn (down 0.20%), wheat (down 0.99%) and ICE cotton (down 0.81%) futures saw further declines, while ICE cocoa (up 1.63%) and CME live cattle (up 0.65%) futures headed higher in early trading calls stateside.