Commodities: Oil ekes out gains after Fed, inventory report

Date: Thursday 26 Apr 2012

Crude oil futures shrugged off early losses to capture modest gains on Wednesday after minutes from the Federal Reserve's Open Market Committee and a bigger than expected increase in inventories.

Crude for June delivery settled 57 cents higher at $104.12 a barrel on the New York Mercantile Exchange.

In London Brent crude gained 96 cents at $119.12 a barrel on the ICE futures exchange.

Oil prices struggled to find any real direction early in the session but shifted onto positive ground as the Fed confirmed it still plans to keep short-term interest rates close to zero until late 2014.

Low interest rates have boosted appetite for commodities as it reduces the appeal of interest rate related investments. The central bank also gave no indication of additional monetary stimulus.

Separately the Department of Energy's Energy Information Administration latest weekly oil inventory report showed a bigger than expected 4m barrel increase in oil inventories. Analysts had expected an increase of 1.5m barrels for the week ended 20 April, indicating sluggish demand.

The EIA said gasoline stockpiles declined 2.2m barrels last week, confounding expectations of a 1m barrel decline and distillates, which include heating oil and diesel, dropped 3.1m barrels. Distillates were expected to rise by 100,000 barrels. The EIA is due to report on natural-gas inventories on Thursday.

Among precious metals gold recovered from a steep drop on Wednesday to settle modestly lower on Wednesday after the Federal Reserve dashed any hopes of monetary stimulus.

Gold for June delivery lost $1.50 to settle at $1,642.30 an ounce on the Comex division of the New York Mercantile Exchange.

Silver for May delivery surrendered 39 cents to close at $30.36 per ounce.



CJ

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