Commodities: Oil drops sharply as inventories continue rising

Significantly, data from the Energy Information Administration, the US Department of Energy’s statistical arm, revealed a smaller –than-expected drop of 2.5m barrels in commercial crude stockpiles for the week ending on 8 July.

That came close on the heels of a report from the American Petroleum Institute released on the previous day which showed an unexpected build in inventories.

Oil stored on tankers worldwide reached 95m barrels in June, the most since the Great Financial crisis, the IEA said in a separate report.

Saudi Arabia ramped up its production to a near-record 10.45m barrels per day in June, alongside record of OECD commercial oil inventories last month of 3.074m barrels per day, according to the IEA.

Macquarie cautious towards iron ore

Iron ore futures dipped by 0.4% to $59.15 a dry metric tonne, Metal Bulletin reported, one day after prices reached their highest mark since 5 May.

Gains over the past two month prompted analysts at Macquarie to caution clients that they were “sceptical as to any fundamental support for the recent move, given abundant iron ore supply, high port inventories and flat to lower steel production.”

“While the China domestic market appears to be focusing more on potential stimulus, we believe a fundamental factor which could help to reverse the rally in iron ore prices could come from the recent weakening in oil prices,” the Australian broker said in a research report published on Wednesday and dated 12 July.

Nonetheless, the Australian broker reiterated it was confident that price support for iron ore at $50 per tonne would hold through 2017.

Three month LME-traded copper futures on the other hand were 2.5% higher to $4,929 per metric tonne as of 16:34 BST.

Corn futures well bid

Among soft commodities, corn futures closed 2.8% stronger on the day at $3.62 per bushel out on the Chicago Board of Trade, alongside gains of 1.5% to $2.0975 per bushel for oat futures.

Soybeans were higher by 1.9% at $11.22 per bushel as of 19:30BST and wheat futures by another 0.3% to $4.3975 per bushel.

White sugar futures rose by 0.5% to $536.40 per metric tonne.

Overall, the Bloomberg commodity index slipped 0.6% to 86.98.