Crude oil futures led commodities lower on Wednesday as the latest figures on US production and stocks surprised on the downside and reports that talks with Iran on its nuclear program might start next month.
The latest US Energy Information Administration (EIA) figures came a day before OPEC and its non-member mates (in OPEC+) meet to decide on the next cut to the size of the global output cut tonight.
That meeting is expected to approve a 400,000 barrel a day cut to the cap for the next month.
Traders had been focusing on that forthcoming meeting and were taken by surprise by the EIA data which saw US crude futures dip under $US80 a barrel in late electronic trading after settling around $US80.86 a barrel in New York. That was a fall of more than 3% on the day at settlement which grew to a 4% plus loss in after hours dealing in early Asian time.
Brent crude fell under $US82 a barrel to trade around $US81.25 a barrel after peaking at $US84 early in the session and before the US data release.
Traders said the Federal Reserve’s much anticipated decision to start cutting its bond buying (Quantitative Easing) had no impact on oil.
Gold, silver and copper ended lower, with gold the hardest hit, settling 1.4% or $US25.50 at $US1,763.90. However it bounced back to trade well above $US1,770 an ounce after the Fed’s tapering announcement.
But for oil the surprise was that given the strength in activity in the US, the data showed a build of stocks while domestic production matched its highest level since the early days of the pandemic.
Crude-oil stockpiles rose by 3.3 million barrels to 434.1 million barrels, but still around 6% below the five-year average, the EIA said. The rise was more than double that forecast by analysts.
Oil stored at Cushing, the delivery point for the Nymex futures contract, fell by 916,000 barrels from the previous week, to 26.4 million barrels, the EIA said in its weekly report.
US crude-oil production rose by 200,000 barrels a day last week to an estimated 11.5 million barrels a day, a million barrels a day more than a year ago.
The Iran nuclear talks story was a ‘float’ with no real confirmation byt analysts reckon there are signs of progress towards discussions, but any release of Irnaian crude into the market is a long way off.
