Commodities Round-up: US crude inventory data stalls oil price decline but oversupply fears persist

Oil futures recovered on Thursday (9 February) after an unexpected drawdown in US crude inventories sparked a recovery run, thereby reversing three successive sessions in negative territory.

Overnight, the US Energy Information Administration (EIA) said the country's gasoline inventories fell by 869,000 barrels last week to 256.2m barrels, versus a Reuters' analyst polls predicting a 1.1m barrel gain. The market took it as a nudge towards higher demand as the US driving season approaches.

At 4:23pm GMT, the Brent front month futures contract was 1.26% or 66 cents higher at $55.64 per barrel, while the West Texas Intermediate (WTI) was up 0.94% or 52 cents at $52.97 per barrel, as both benchmarks returned to positive territory.

Yet, fears of an oversupplied market continue to persist. In a note to clients, analysts at Société Générale's commodities team wrote: "Decline rates for US shale wells are still steep, but initial production levels, production profiles, and ultimate recovery volumes have increased. Going forward, higher production profiles mean stronger aggregate supply."

Global investment bank Goldman Sachs told its clients that high fuel inventories and rising US crude production imply "oil markets would be over-supplied for some time, but that they would drain gradually."

"We view the faster shale rebound as creating downside risk to our 2018 WTI price forecast of $55 per barrel, but not to our expectation that the global oil market will shift into deficit in first half of 2017."

Away from the oil market, precious metals headed into the realm of a marginal correction following three sessions in positive territory as traders indulged in profit-taking. At 3:47pm GMT, the Comex gold futures contract for April delivery was down 0.45% or $5.60 at $1,233.90 an ounce, while spot gold was 0.53% or $6.54 lower at $1,234.99 an ounce.

FXTM chief market strategist Hussein Sayed said: "Investors fell in love with gold again for same reasons for it being dumped in November through mid-December last year. Rising political risks on both sides of the Atlantic will continue to support the yellow metal, but how further it may shine depends on real interest rates and the dollar's direction."

Finally, Comex silver was down 0.25% or 4 cents to $17.66 an ounce, while spot platinum was 0.29% or $2.98 lower at $1,019.93 an ounce.