Crude oil prices managed a partial recovery on Thursday after falling more than $1 a barrel in the previous session.
Meanwhile, base metals made modest gains in cautious trading across commodity markets as European leaders convened for a two-day summit to discuss a possible rescue package for Greece.
The European Central Bank announced further support for Greece with news that the ECB would keep the minimum credit threshold in the collateral framework at BBB- beyond the end of 2010, instead of reverting back to A- as originally planned.
“This drastically reduces the possibility that Greek government bonds will become ineligible in the ECB refinancing operations next year and has consequently led to sharp falls in Greek two-year government bond yields,” said Nick Kounis, chief European economist at Fortis Bank.
The ECB has also announced the introduction of a “graded haircut schedule” (the lower the rating, the higher the haircut) that should make the collateral system more efficient.
Mr Kounis said the ECB move could also be seen specifically as a helping hand for Greece and a demonstration of the kind of European solidarity that the central bank might have felt was lacking at government level over the past few days.
In energy markets, Nymex May West Texas Intermediate rose 41 cents to $81.02 a barrel while ICE May Brent gained 34 cents at $79.96 a barrel.
Olivier Jakob at Petromatrix, the consultancy, said supply and demand fundamentals in the US looked comfortable, with ample stocks and a large amount of spare capacity in the refining system.
Mr Jakob noted, however, that open interest – or active positions – in the oil market was much higher than a year ago and the net length – or bets on price gains – by large speculators in crude and oil products combined was four times higher than the same time a year ago.
“A lot of expectations are being built into the price of oil but at one stage the expectations will need to be met by facts,” said Mr Jakob.
US inventories data, released on Wednesday, showed crude stocks jumped by 7.3m barrels last week, substantially more than consensus forecast for an increase of 1.5m barrels.
The increase was mainly driven by a big rise in imports, up 969,000 barrels a day to average 9.4m b/d last week.
Refinery utilisation rose 0.5 percentage points to 81.1 per cent, slightly stronger than expected.
However, petrol and distillate stocks both fell more than had been expected.
Petrol inventories fell 2.7m barrels, more than double the 1.3m barrel decline expected by the consensus.
On Thursday, Nymex April RBOB gasoline rose 1.1 cents, or 0.5 per cent, at $2.2319 a gallon.
Distillate stocks (including heating oil) dropped for an eighth week in succession, down 2.4m barrels and well above the consensus forecast for a decline of 1m barrels.
On Thursday, Nymex April heating oil inched up 0.7 cents, or 0.4 per cent, at $2.0785 a gallon.
Sugar prices tried to stabilise after recent heavy selling. ICE May raw sugar slipped 0.6 per cent to 17.56 cents a pound while Liffe May white sugar added 0.2 per cent to $486 a tonne, remaining below the $500-a-tonne level.
Gold traded at $1,094 a troy ounce after ending Wednesday’s session in New York at $1,087.
Among the base metals, copper rose 0.7 per cent to $7,403 a tonne while aluminium added 0.8 per cent at $2,207 a tonne.
