ECM: Crude Oil Prices Supported By Recovery In Commodity Prices, Inventories In Focus
There was some disappointment surrounding the API inventories data and mixed messages from OPEC, but oil prices have gained net support from improved risk conditions and wider recovery in commodity prices.
Oil prices were subjected to choppy trading conditions in US trading on Tuesday with a $52.30-52.80 range with a generally fragile tone in equities and overall weakness in commodities having a significant impact in curbing support for energy prices.
The latest American Petroleum Institute (API) data recorded a draw in inventories of 0.8mn barrels for the week ending April 7th and the third successive weekly draw although it was lower than the expected draw of 1.3mn barrels.
There was also a build in gasoline inventories which hampered confidence and there was a dip in oil prices following the data with WTI retreating to the $52.30 p/b area following the data.
Prices drifted in narrow ranges during Wednesdayâ€™s Asian session as caution prevailed.
There were positive comments from OPEC secretary-general Barkindo that the group was committed to restring market stability by bringing inventories down to the five-year average.
The overall impact was limited, especially as Saudi Arabian Oil Minister Khalid al-Falih stated that it was premature to discuss an extension of OPEC production cuts.
There was a more positive tone surrounding risk conditions which helped underpin energy prices, especially as there was a wider recovery in commodity prices.
Overall, WTI edged higher to the $52.50 p/b area ahead of the US open with Brent trading back just above the $55.00 level.
The latest Energy Information Administration (EIA) inventories data will be released later on Wednesday with expectations of a small draw still intact following the API data. There is a strong probability that US production will increase again and a sharp draw in inventories will be needed to boost overall sentiment.