The price of oil climbed in London on worries that supply might be less plentiful than previously thought.
Yesterday’s inventory report from the US Department of Energy signalled tighter-than-expected supply levels, with inventories down by 3.7 million barrels, far more than the average forecast of 500,000 barrels. However, the recent run higher in crude prices, around $8 for the week, has resulted in a degree of profit taking, so it would be unwise to attribute the price drop solely to the inventory data.
Commodities have been boosted in recent days by a weaker dollar, that has dropped as a result of continued hopes of additional stimulus in the US, while a stronger non-farm payrolls report last week was able to give general risk appetite a fillip. However, this positive atmosphere may not last throughout August, with the possibility that a renewed crisis in the eurozone will prompt a rush to safe havens, including the US dollar, which will cause commodity prices to drop.