US crude oil dipped on Thursday after pushing above the $81 a barrel level in the previous session, while base metals made further gains as risk appetite strengthened.
Sentiment towards commodities found support from growing hopes for a resolution to fiscal problems in Greece after the government announced plans for further tax increases and spending cuts to tackle the country’s budget deficit.
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In energy markets, Nymex April West Texas Intermediate fell 32 cents to $80.55 a barrel while ICE April Brent lost 43 cents to $78.82 a barrel.
Oil prices rose after US inventories data, released on Wednesday, showed that crude stocks rose 4.1m barrels last week, well above the consensus forecast for an increase of 1.4m barrels.
Imports of crude oil were above the key 9m barrels a day mark, up 152,000 b/d to average 9.24m b/d last week.
Eugen Weinberg, commodities strategist at Commerzbank, said it was “premature” to assume that weakness in US oil demand growth was reversing.
Commerzbank also noted that global crude oil supply was on the rise, with Iraq exporting 2.07m barrels per day of crude in February, the highest monthly export volume since 1990.
“Fundamentals can hardly justify the current high oil price level at present,” said Mr Weinberg.
In contrast, Paul Horsnell of Barclays Capital said data revisions for the month of December showed a more positive dynamic in US demand than was evident in the weekly figures as consumption of distillates had shown its first year-on-year increase in 27 months.
Barclays is forecasting an increase of 150,000 b/d in total US demand this year, but said the recent surge in Asian demand was a more important driver of price growth.
“The pressure has been building for a convincing break above $80 per barrel, and we believe that the whole trading range is in the process of making its next gentle upwards shift,” said Mr Horsnell who reiterated his forecast for WTI to average $85 a barrel this year.
Gold traded at $1,140 a troy ounce, little changed after ending Wednesday’s session in New York at $1,139.50.
Edel Tully, newly appointed as gold analyst at UBS, said fresh inflows this week into the SPDR gold exchange traded fund, the largest physically backed ETF, suggested a “a change in sentiment.”
UBS cautioned that with gold prices rising again, increased participation from the wider investor market was necessary to move bullion into a new, higher price channel.
“We see signs of this emerging, not only in the ETF space but also in a noticeable pick-up in coin demand seen by UBS over the past three days,” said Dr Tully. “But in order for gold to capitalise on recent price moves, continued support from wider market participants including the ETF club is necessary.”
Sugar prices continued to struggle after a sharp correction earlier this week. ICE May raw sugar slipped 0.1 per cent to 22.03 cents a pound while Liffe May white sugar lost 1.1 per cent to $612.9 a tonne.
Expectations that Brazilian producers would make an early start to processing this year and reports of a recovery in India’s sugar production in the 2009-10 season, which started in October, pulled sugar prices sharply lower at the start of the week.
Among the base metals, nickel rose 1.5 per cent to $22,999 a tonne on expectations that stainless steel producers, the main users of nickel, would see a strong improvement in output this year.
However, copper dipped 0.1 per cent to $7,545 a tonne after strong gains earlier this week. The metal had been boosted by supply concerns following the huge earthquake in Chile which caused widespread damage to roads, bridges and ports.
Aluminium rose 1.6 per cent to $2,234 a tonne while zinc added 1.4 per cent to $2,322 a tonne and lead gained 1.2 per cent to $2,240 a tonne.
