Commodities prices were broadly lower on Wednesday ahead of closely followed oil inventories data from the US government’s energy department released later in the day.
Oil slipped after seperate data from the American Petroleum Institute reported a lower-than-forecast 1.3m barrel fall in US crude stocks in the week ending June 12. The institute also reported a 2.1m barrel build in gasoline stocks – a figure that surprised analysts expecting a decrease.
Nymex July West Texas Intermediate oil dropped 27 cents to $70.20, while ICE August Brent was flat at $70.18. Nymex July RBOB gasoline futures lost 3.41 cents to $2.0370 a gallon.
The US Energy Information Administration, the statistical arm of the US department of energy, is expected to report that crude stocks fell by 1.7m barrels, according to the consensus figure of a Reuters poll of analysts.
Gasoline stocks are expected to drop by 100,000 barrels, and distillates inventories are seen as rising by 800,000 barrels, according to the same survey.
Oil, which gained 37 per cent since the start of May, has slipped back over the past week as analysts have begun to question the strength of the economic recovery previously mooted as the fundamental factor underpinning the rally.
“The impact of China’s pro-growth policies is positive domestically but its effects are less clear elsewhere. Replacing the US as global consumer of last resort is not an easy task given the magnitude of US household spending,” said BNP Paribas as they reiterated their bearish stance on crude.
“In the end, it’s the economy. When the oil price sustained a move above $60 per barrel in 2007, the world economy grew by 5 per cent, in 2009 it is expected to contract 1.5 per cent or more. Whether the economy can afford a $70 a barrel price tag at this stage of the cycle remains to be seen.”