Oil rebounded to trade above $79 today, aided by an industry report showing a surprise drop in US crude inventories, after sliding almost 2 per cent a day earlier on renewed economic recovery concerns.
Prices broke a five-day rally yesterday after a drop in US 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, U.S. crude for April gained 33 cents to $79.19 a barrel by 5.28am, while London ICE Brent rose 30 cents to $77.55. Gold also regained some ground today, with spot gold at $1,105.50 an ounce, up $2.55 from New York's notional close yesterday.
Markets will seek direction today 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 a drop of 3.1 million barrel in US crude inventories last week reported by the American Petroleum Institute yesterday.
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 today.
US refiners increased the proportion of total capacity they used the week ended February 19th, the API said, signalling their crude intake was larger, which partly accounted for the inventory drop.
Refinery utilisation rose 0.9 percentage points to 80.8 percent of capacity, from 79.9 per cent. 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 company's refineries in France.
Reuters