Oil Slips Near $63 as Risks Counter Reported U.S. Inventory Draw

Oil traded near the lowest closing price in two weeks as concerns about volatility in global markets offset an unexpected drop in U.S. inventories.

Futures in New York dropped 0.7 percent after earlier gaining as much as 1.3 percent. American Petroleum Institute data Tuesday showed an unexpected decrease in U.S. stockpiles, while on Wednesday U.S. equity futures fell and the dollar rose. Investors are watching whether government inventory data confirms a decline when released later.

Crude is struggling to extend last month’s largely dollar-driven gains on speculation that U.S. output will impede efforts by the Organization of Petroleum Exporting Countries to drain a glut. Goldman Sachs Group Inc. stuck to its bullish call on commodities, saying the recent global equity sell-off only bolsters its view that raw materials are set to perform well in the months ahead.

“Investors are a bit mixed today, which makes sense after we saw the huge risk-off mode at the start of the week,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “Yesterday’s inventory data showed a different picture, which triggered a small recovery and now we’re waiting for today’s number.”

API Surprise

West Texas Intermediate for March delivery was 41 cents lower at $62.98 as of 12:19 p.m. in London, after dropping 1.2 percent on Tuesday to the lowest since Jan. 19. Total volume traded was about 6 percent above the 100-day average.

Brent for April settlement fell 24 cents to $66.62 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.91 to April WTI.

The API was said to report U.S. crude stockpiles slid 1.05 million barrels last week, with storage also shrinking at tanks in the key hub of Cushing, Oklahoma. That compares with a forecast of nationwide inventories rising by 3.15 million barrels in a Bloomberg survey.

Other oil-market news:

Crude inventories in the key ARA storage hub in Europe fell to their lowest level since February 2015, according to Genscape data. The rebound in stock prices spread to Europe, but markets remained on edge as Asian equities pared their advance while U.S. futures retreated. Statoil ASA beat analysts’ profit expectations in the fourth quarter as Norway’s biggest oil producer managed to take advantage of crude’s recovery to a larger extent than many of its bigger rivals.