Oil traded near the lowest closing price in two weeks as concerns about volatility in global markets offset an unexpected drop in U.S. inventories.
Futures in New York dropped 0.7 per cent after earlier gaining as much as 1.3 per cent. American Petroleum Institute data Tuesday showed an unexpected decrease in U.S. stockpiles, while on Wednesday U.S. equity futures fell and the dollar rose. Investors are watching whether government inventory data confirms a decline when released later.
Crude is struggling to extend last month’s largely dollar-driven gains on speculation that U.S. output will impede efforts by the Organization of Petroleum Exporting Countries to drain a glut. Goldman Sachs Group Inc. 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,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “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 for March delivery was 41 cents lower at $62.98 as of 12:19 p.m. in London, after dropping 1.2 per cent on Tuesday to the lowest since Jan. 19.
Brent for April settlement fell 24 cents to $66.62 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.91 to April WTI.
The API was said to report U.S. crude stockpiles slid 1.05 million bbls last week, with storage also shrinking at tanks in the key hub of Cushing, Okla. That compares with a forecast of nationwide inventories rising by 3.15 million bbls in a Bloomberg survey.
© 2018 Bloomberg L.P.