Yesterday’s U.S. Energy Information Administration inventories data helped boost oil prices, despite inventories being shown to have increased for the seventh consecutive week. However, seasonality means that it is normal for inventories to grow at this time of year and the fact that the growth was significantly below forecasts indicated that OPEC supply cuts are now beginning to feed through. The Wall Street Journal’s survey of analysts and traders had forecast a 3.4 million barrel increase in crude inventories, which turned out to only by 564,000 barrels.
Crucially, imports were down, giving the strongest clue yet on the physical impact of OPEC and partners’ 1.8 million barrels a day cut in production, which came into force on January 1st. Oil prices initially rose on the news yesterday, Brent crude adding 81 cents to $56.65. WTI gained 71 cents to $54.34. Initial gains of around 2% were, however, quickly pared back with the current extent of inventories meaning that when net falls do eventually materialise it will take considerable time for them to deplete. Traders profit taking on the jump was also almost certainly a factor.
This morning prices have dipped with Brent crude back down to $56.10 a barrel shortly after markets opening in London, having shed 48 cents. WTI shed 39 cents down to $54.06.
Gold prices, meanwhile, had a good day yesterday. With the prospect for a March interest rate hike by the Fed receding, spot gold prices reaching 3.5 month highs yesterday, up to $1,251.14 oz. While there was a very slight dip during Asian trading, down to $1249.37 oz., gold prices look set to finish the week around 1% up. Gold futures are sitting at $1250.8.