Lower inventories send crude oil prices higher

After a decline early in the day on reports that OPEC will not implement further cuts in oil production as they had been expected to do, crude oil prices were up on Wednesday on lower US inventory levels. Brent crude January deliveries were 14 cents higher to $61.66 per barrel late in the afternoon in London, while West Texas Intermediate crude contracts for January added 74 cents to $61.76 per barrel in late morning trade on the New York Mercantile Exchange.

The Energy Information Department said that crude oil stockpiles in the US were down by 4.3 million barrels to 335.4 million barrels in the week ending December 8. That was much more of a decline than the 600,000 barrels that had been expected. The huge decline was seen as an indication that the production cuts OPEC made in November were doing what was intended, that is to tighten supplies. The International Energy Agency had earlier said that its recommendation was that OPEC not cut production any more than it already had.

In the metals markets on Wednesday, gold was 70 cents lower in slow trade to $628.70/$6.29.35 per troy ounce. Most base metals were lower as well, the one notable exception being nickel, which was $425 higher to $33,225 per tonne. Aluminium dropped $7 to $2,800 per tonne, while zinc fell $90 to $4,290 per tonne and copper was $150 lower to $6,700 per tonne. Lead dropped over 4.5 percent to $1,650 per tonne on another increase in London Metal Exchange inventories.

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