Volatile crude swings sharply lower

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Crude prices were highly volatile on Thursday as an unexpectedly strong rise in natural gas inventories were pitched against the effects of falling US petrol stocks.

Prices spent most of the session up, with the early focus on petrol inventories in the US, which have fallen for the past five weeks, and Brent crude rose more than a dollar higher in early London trade.

Market observers insisted petrol reserves were likely to continue to drive crude prices in the coming weeks. Stocks fell a little more than expected in the week to April 1 as demand ran 2.5 per cent higher than at the same time last year.

Refiners reported growing utilisation, which rose to a 13-week high of 93.7 per cent as most completed maintenance but still could not keep up with demand.

“We see that in prior years, it is just about now that declining stocks start to reverse course and move higher,” said Edward Meir at Man Financial. “The failure of gasoline to do so at this time should be of mounting concern, as refinery utilisation is running higher than it has been at any time over the past four years.”

US gasoline futures have edged from their highs in recent sessions, however, and yesterday fell 2.92 cents to $1.63 a gallon, easing some pressure on crude prices. Meanwhile, inventories of natural gas showed an unexpectedly strong rise, the EIA reported.

These opposing pulls ensured a volatile session, and by the close in New York the price of Nymex WTI for May delivery was down $1.74 to $54.11 a barrel, having peaked the session at $56.84.

Brent crude trade was hampered yesterday as the electronic trading platform at London’s International Petroleum Exchange suffered a technical fault on the final session of open-outcry trading before the IPE goes fully electronic today. Front-month Brent was also volatile, and closed at $54.05 a barrel, down $1.23. At one point it was more than a dollar higher at $56.48.

Copper traded just a few dollars shy of all-time highs on the London Metal Exchange, having moved 1.5 per cent higher in the previous session.

The metal moved a little higher yesterday as the dollar edged lower. US jobless data was in line with expectations, and the European Central Bank kept eurozone interest rates on hold at 2 per cent, ending the currency’s recent rally.

“The combination of low stocks, under-hedged consumers and renewed speculative buying inspired by a firmer euro were all factors behind the move higher,” said Ingrid Sternby at Barclays Capital.

By the close of open outcry on the London Metal Exchange, copper was up $4.50 at $3,289 a tonne.

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