Commodities round-up: Profit takers drag oil lower as US data-driven rally fizzles out

Oil futures headed lower on Friday (9 September) following an overnight rally on the back of the biggest decline in US crude inventories since 1999.

Data published on Thursday by the US Energy Information Administration (EIA) revealed the country's crude inventories fell 14.5 million barrels in the week ended 2 September; the biggest drop since January 1999, versus market predictions for a 600,000 to 825,000 barrel gain.

As tropical Storm Hermine moved into the Gulf of Mexico on 28 August, disruptions caused to oil shipments saw US oil imports fall by 1.85 million barrels while refinery activity increased, causing the massive drawdown.

At 1.22pm BST, the Brent front-month futures contract was down 1.86% or 93 cents to $49.06 (£38.90, €43.70m) per barrel, having spiked to $49.99 overnight, while West Texas Intermediate was 1.64% or 87 cents lower at $46.86 per barrel, having risen to $47.62 per barrel.

Nonetheless, many commentators believe the price uptick is situational as the oil market is far from balanced. Saad Rahim, chief economist at oil trading firm Trafigura, said: "The market has yet to even start working through millions of barrels of inventories accumulated during the downturn."

Fawad Razaqzada, technical analyst at FOREX.com, said traders appear to be buying oil now and will be asking questions later. "If $46.50 does not hold as support then the short-term bias would turn bearish once again. WTI now needs to break above the descending trend line at $47.20.

"If it starts to move above the trend line then it may go on to break the next resistance at $47.45 before embarking on a potential rally towards the prior swing high at $49.10 and that $50 hurdle once again."

Away from the oil markets, precious metals slipped into negative territory as the weekend approached. At the 1.31pm BST, the Comex gold contract for December delivery was 0.13% or $1.71 lower.

FXTM research analyst Lukman Otunuga said: "Dollar bulls made an appearance on Thursday consequently providing a foundation for gold bears to install heavy rounds of selling. From a technical standpoint, gold bulls remain in control as long as the $1,315 support defends.

"The yellow metal remains quite sensitive to US rate speculations and may be injected with volatility as investors ponder whether the Federal Reserve will break the trend of central bank caution."

Finally, Comex silver futures were 0.63% or 12 cents lower at $19.90 an ounce, while spot platinum fell 0.37% or $3.96 to $1,080.69 an ounce.