OIL TRADED near its lowest closing price in two weeks as concerns about volatility in global markets offset a drop in US inventories.
Futures in New York dropped 0.2percent after earlier gaining as much as 1.3percent. American Petroleum Institute data on Tuesday showed an unexpected decrease in US stockpiles, while equity markets are clawing back on calls to “buy the dip” after extreme volatility earlier this week. Investors are watching if government inventory data also surprises with a decline when released yesterday.
Crude is struggling to extend last month’s largely dollar-driven gains on speculation that US output will impede efforts by Opec to drain a glut. Goldman Sachs Group stuck to its bullish call on commodities, saying the recent global equity sell-off only bolsters its view that raw materials are set to perform well in the months ahead.
“Investors are a bit mixed today, which makes sense after we saw the huge risk-off mode at the start of the week,” says Hans van Cleef, senior energy economist at ABN Amro Bank. “Yesterday’s inventory data showed a different picture, which triggered a small recovery and now we’re waiting for today’s number.”
West Texas Intermediate (WTI) for March delivery was 10cents lower at $63.29 (R762.45) as of 10.25am in London, after dropping 1.2percent on Tuesday to the lowest since January 19. Total volume traded was about 13percent above the 100-day average.
Brent for April settlement fell 2c to $66.84 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.84 to April WTI.
US crude stockpiles were reported to be down to 1.05million barrels last week, with storage also shrinking at tanks in the key hub of Cushing, Oklahoma.