Oil dips ahead of US inventories data - Metals tarnished after China stocks tumble

Oil dips ahead of US inventories data - Metals tarnished after China stocks tumble
By Chris Flood
Copyright The Financial Times Limited 2009
Published: August 19 2009 12:03 | Last updated: August 19 2009 12:03
http://www.ft.com/cms/s/0/d3c18934-8cae-11de-a540-00144feabdc0.html


Oil prices dipped on Wednesday ahead of the latest US inventories data while base metals retreated after a sharp fall in the Chinese stock market.

In energy markets, Nymex September West Texas Intermediate fell 35 cents to $68.85 a barrel. The September contract expires on Thursday and the October WTI contract traded 55 cents lower at $70.55. ICE October Brent lost 44 cents at $71.93.

Crude oil prices had staged a late rally in a volatile session on Tuesday after the American Petroleum Institute said crude oil inventories fell by 6.1m barrels last week, way above expectations.

The API data are not as comprehensive as the figures released by the Energy Information Administration, the statistical arm of the US Department of Energy.

“It should be noted that the EIA numbers have not been tracking the API so closely of late, and considering the strong price gains of the past 24 hours, the possibility of a downside reversal below the $70 mark remains strong,” said Ed Meir of MF Global.

The EIA data, due for release later in the session, were expected to show US crude stocks rose 1.3m barrels last week, according to a poll of analysts by Reuters. Meanwhile, gasoline inventories were seen as falling by 1.1m barrels and distillates stocks were forecast to have risen 600,000 barrels.

Nymex September RBOB unleaded gasoline traded 2.4 cents weaker at $1.9757 a gallon while Nymex September heating oil lost 1.8 cents at $1.8467 a gallon.

Demand for crude from US refineries has remained weak and refinery utilisation was expected to increase just 0.1 percentage points to 83.6 per cent, after declining for the previous four weeks.

Sugar prices rose amid ongoing concerns that drought will affect production in India, the world’s second-largest producer and largest sugar consumer. ICE October raw sugar rose 0.8 per cent to 21.96 cents per pound while Liffe October white sugar gained 0.3 per cent to $548.7 a tonne.

Among the base metals, aluminium lost 3.1 per cent to $1,934.5 a tonne, while copper fell 2.1 per cent to $5,946 a tonne. Concerns that the Chinese government will be forced to reign in rapid growth in bank lending have weighed on sentiment towards base metals.