Singapore: Oil rebounded to trade above $79 on Wednesday as it was aided by an industry report that showed a surprise drop in U.S. crude inventories, after sliding almost 2 percent a day earlier on renewed economic concerns.
Prices broke a five-day rally on Tuesday after a drop in U.S. consumer confidence and German business sentiment sent commodities lower, prompting investors to flee to safer havens such as the dollar. Crude prices were dragged down $1.45 and spot gold prices were weaker.
However, US crude for April gained 38 cents to $79.24 a barrel at 0250 GMT, while London ICE Brent rose 34 cents to $77.59. Gold also regained some ground on Wednesday, with spot gold at $1,106.45 an ounce, up $3.50 from New York’s notional close on Tuesday.
Markets will seek direction Wednesday from US Federal Reserve chairman Ben Bernanke’s testimony to the United States Congress and Chinese trade data for January.
“Consumer confidence fell yesterday and that led to the high prices facing some pressure, but then the API showed some unexpected data,” said ANZ Bank commodities analyst Serene Lim, referring to the drop of 3.1 million barrel in US crude inventories last week reported by the American Petroleum Institute on Tuesday.
Stockpiles were expected to have gained 2 million barrels, according to a Reuters poll. The Energy Information Administration (EIA) will publish government stockpile data for last week later on Wednesday.
“The market is looking at reading between the lines of what Bernanke says, and if the statement is positive, prices could rise above $80 again,” Lim said from Singapore.
US refiners increased the proportion of total capacity they used the week ended 19 February, the API said, signalling their crude intake was larger, which partly accounted for the inventory drop.
Refinery utilization rose 0.9 percentage points to 80.8% of capacity, from 79.9%. This also meant refiners produced more fuel.
Gasoline inventories rose 1.7 million barrels compared with estimates for a 400,000 barrel increase, the API said, while supplies of distillates including heating oil and diesel fell 834,000 barrels, compared to the 1.6 million barrel decline expected by analysts.
Total has pledged not to close or sell any French refineries other than its Dunkirk plant for five years, which unions say clears the way to end a week-long strike at the companies refineries in France.