Oil rises with Wall Street

Specialist Robert Tuccilo, center, work at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK/LONDON: Oil prices rose for the first time in three days on Wednesday, boosted by an early Wall Street rally ahead of a news conference by US President-elect Donald Trump.
Oil’s gains came despite government data showing a bigger-than-expected weekly build in US crude and fuel inventories.
Wall Street shares rose early ahead of the speech in which Trump was expected to provide more details about his plans for the world’s largest economy. Once Trump started speaking, stocks pared gains and the S&P 500 index slipped into negative territory.
Brent was up $1.42, or 2.7 percent, at $55.06 a barrel by 11:17 a.m. EST (1617 GMT). US West Texas Intermediate (WTI) rose $1.30, or 2.6 percent, to $52.12 per barrel.
That put both contracts on track for their biggest daily percentage gains since Dec. 1. On Tuesday, Brent and US crude futures settled at their lowest levels in a month.
“We expect some bullish OPEC rhetoric to ramp up in an attempt to neutralize the bearish vibes that have emanated from the recent production increases indicated out of Libya, Iran, Iraq and Nigeria,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
North American drilling is on the rise, while European and Chinese traders are shipping a record 22 million barrels of crude from the North Sea and Azerbaijan to Asia this month.
The Organization of the Petroleum Exporting Countries’ (OPEC) No. 2 producer Iraq plans to raise crude exports from its southern port of Basra to an all-time high of 3.641 million bpd in February.
US crude production was projected to rise by 110,000 barrels per day in 2017 to 9 million bpd, according to US Energy Information (EIA) data.
Separately, EIA said Wednesday US crude inventories increased by 4.1 million barrels last week.
That topped both the 1.2 million barrel build that analysts forecast in a Reuters poll and the 1.5 million barrel build in data Tuesday from the American Petroleum Institute, an industry group.
“It is one the most uniformly bearish reports in some time,” said John Kilduff, partner at energy hedge fund Again Capital in New York.
Gold retreats
Gold retreated from six-week highs on Wednesday as the stronger dollar undermined confidence, but investor buying interest due to political uncertainty is seen supporting prices this year.
Spot gold was down 0.4 percent at 1,182.71 an ounce at 1443 GMT from an earlier peak of $1,191.32, the strongest since Nov. 30.
US gold futures gained 0.2 percent to $1,183.2. The trigger for early gains was nervousness ahead of US President-elect Donald Trump’s first formal news conference at 1600 GMT. Investors will focus on what Trump has to say about trade, relations with China and plans for the economy.
Analysts say elections over the course of the year in France, the Netherlands and Germany are likely to create political tensions in the EU and support gold. “The uncertainty surrounding Brexit could lead to further demand for gold from retail investors in the UK,” Quantitative Commodity Research analyst Peter Fertig said.
A higher US currency, near a 14-year peak against a basket of currencies, makes dollar-denominated commodities more expensive for holders of other currencies. Further gains for the dollar due to US rate hikes during the course of the year are possible.
US Federal Reserve policymakers in December signaled the possibility of three rises this year. That may mean higher US Treasury yields, making it cheaper for investors to buy US government bonds, which like gold are seen as risk-free.