Singapore: Oil inched down towards $79 a barrel on Wednesday, after rising nearly 2% a day ago, following an industry report showing a rise in fuel inventories in the United States though crude fell unexpectedly.
Losses were kept in check as gold held near record highs and traders awaited separate US government oil inventory data, as well as a Federal Reserve statement on interest rates and the economy - all due out later on Wednesday - before making further moves.
US crude for December fell 26 cents to $79.35 a barrel by 9:04am, after settling up $1.47 on Tuesday. London Brent crude shed 28 cents to $77.83 a barrel.
“Some of today’s losses can be contributed to the API data, but the real focus is on the EIA numbers due out later,” said Tomokazu Amano, an analyst at Mitsubishi Corp Futures & Securities in Tokyo.
Analysts also said there might be some traders in long positions booking some profit ahead of the issue of US stockpile data from the Energy Information Administration (EIA).
Industry group American Petroleum Institute said late on Tuesday that US gasoline stocks rose by 501,000 barrels last week against forecasts for a 300,000-barrel increase, while distillate supplies increased by 1.8 million barrels versus predictions for a 1 million-barrel decline.
The API said commercial crude oil stocks fell 3.3 million barrels as imports dropped in the week to 30 October, versus expectation for a 1.4 million-barrel rise.
Gold stayed near a record high above $1,080 per ounce hit the previous day, defying dollar strength, when the International Monetary Fund’s 200-tonne sale of gold to India’s central bank enhanced sentiment toward the metal.
The bullion rally, along with data showing rising factory orders and firm technical support, pushed crude futures higher on Tuesday.
The US dollar steadied on Wednesday, having hit a one-month high on a basket of currencies a day ago, with traders saying the greenback was likely to consolidate ahead of a raft of central bank meetings.
SG Commodities Research said in a report that front-month crude had seen downward pressure from the modest recovery in the US dollar.
The US Federal Reserve ends its two-day meeting on Wednesday and, while it is expected to keep rates unchanged, there is speculation it might drop or alter its pledge to keep rates low for an “extended period”, even as signs of a recovery mount..
On a bearish note, the International Energy Agency (IEA) will “substantially” downgrade its long-term oil demand forecast in its annual energy outlook next week, the second cut in a row, the Wall Street Journal said, citing a person familiar with the report.
While the IEA’s outlook is unlikely to affect the short-term view that the global economy’s recovery from recession is lifting oil use, it is an important measure for oil companies considering whether to build refineries or drill new wells.