Singapore: Oil retreated on Wednesday, after surging nearly 5% to a record above $100 a day ago, on fresh influx of capital into commodities, with focus turning to US stocks data that are expected to show a build in crude.
US crude slid 73 cents to $99.28 a barrel by 0647 GMT after investors paused for thought following Tuesday’s $4.51 a barrel surge. The contract reached a new peak of $100.10 a day ago, 1 cent beyond its previous Jan. 3 high.
London Brent crude fell 86 cents to $97.70 a barrel.
“It’s just a bit of a correction. The market is settling down after such a massive move last night,” said Peter McGuire, managing director of Commodity Warrants Australia.
Signs that the Organization of the Petroleum Exporting Countries will hold or even cut output when it meets on 5 March as well as uncertainty about Venezuelan and Nigerian supplies, sent prices to triple digits. But worries about the economic health of the United States that could erode demand, pushed oil off its record.
News that Nigerian oil delta rebel leader Henry Okah had been shot dead, later debunked by a government spokesman, a rush of speculative investment in oil and commodities, as well as US refinery problems and the row between Venezuela and Exxon Mobil helped lift prices.
The gains came in tandem with record highs for platinum and soybeans as the commodities complex remained in favour among investors seeking shelter from range-bound share markets.
“The rally may be less indicative of narrowly defined energy fundamentals than of fund capital’s quest for safe havens and financial hedges against inflation,” said Antoine Halff, deputy head of research at brokers Newedge.
While supply concerns have unnerved traders, US supplies still appear healthy, with crude oil stocks expected to have risen for a sixth-straight time last week as imports increased and refinery utilisation held steady.
Crude stocks were expected to rise by 2.3 million barrels, while distillates were seen falling by 2 million barrels and gasoline building by 600,000 barrels, a preliminary Reuters poll showed ahead of data due on Thursday, a day later than usual due to Monday’s public holiday.
“There could be a march northwards from here on, but we’ll have to watch the next few days and see where prices settle,” Commodity Warrants’ McGuire said.