Oil Futures Held On To Gains, But Came Off Highest Levels

Crude oil futures held on to gains but came off the highest levels of the session during U.S. morning trade on Wednesday, after a U.S. government report showed oil supplies declined last week. Renewed optimism in the U.S. economic recovery provided further support to the market as investors remained cautious ahead of Thursday’s key European Union summit.

The U.S. EIA said in its weekly report that U.S. crude oil inventories dipped by 0.1 million barrels in the week ended June 22, compared to expectations for a 0.4 million barrel decline. U.S. crude supplies rose by 2.86 million barrels in the preceding week. Total U.S. crude oil inventories stood at 387.2 million barrels as of last week, just below the highest level since July 1990. Total motor gasoline inventories increased by 2.1 million barrels, above expectations for a gain of 0.8 million barrels, after rising by 0.95 million barrels in the preceding week.

Gold
Gold futures traded slightly higher during U.S. afternoon trade Wednesday, bouncing from the lowest levels of the session despite data indicating U.S. core durable goods orders increased for the first time in three months in May, while total orders rose more-than-expected. Investors remained cautious ahead of a highly anticipated European summit in Brussels amid growing skepticism over the meeting’s outcome. Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.

Meanwhile, investors remained cautious ahead of a European Union summit due to begin on Thursday. Hopes that European leaders would make headway on dealing with the debt crisis in the euro area faded after German Chancellor Angel Merkel reiterated her opposition to the idea of joint eurozone bonds on Tuesday. Investors were looking ahead to the outcome of talks between Chancellor Merkel and French President François Hollande later in the day, ahead of the E.U. Summit meeting on Thursday and Friday.