Oil slips on rise in US fuel stocks, gold prcies down too

Jan 10 2013, 09:26 IST
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SummaryOil prices slipped on Wednesday after a worrying rise in US fuel inventories.

Oil prices slipped on Wednesday after a worrying rise in US fuel inventories while gold edged lower on lingering speculation the Federal Reserve might curtail its highly stimulative monetary policy.

Platinum group metals, which include palladium, rallied as improving US car sales and a better economic outlook triggered fund buying in the metals widely used for purifying auto emissions.

The Thomson Reuters-Jefferies CRB index ended down 0.2 percent for a second straight day after 8 of the 19 markets on the commodities bellwether fell and two others closed flat.

Natural gas was the largest loser on the CRB, falling 3.3 percent on fairly mild near-term weather forecasts in the United States. Bearish U.S. government data this week on gas production also pressured gas prices.

Since the new year began, markets have largely traded sideways held in check by worries of another impending political battle over U.S. fiscal issues.

Markets were on tenterhooks through December, as opposing lawmakers in Congress grappled to reach a deal to avert tax increases and spending cuts that economists warned could push the U.S. economy back into recession.

While a fiscal agreement was reached at the last minute, many lawmakers and their aides fear things may get more toxic in bitter struggles expected in the next few months over the nation's debt and deficit burdens. At stake is the US government's ability to get its finances under control and whether it might default on debts and suffer further downgrades in the U.S. credit rating.

On the optimistic side, some analysts said an uptick in risk appetite was likely in the coming week as investor allocations usually scheduled at the start of the year begin.

"Generally more long-only money comes into commodities at the beginning of the year and my sense is that's going to be still trickling in over the next week or two, so I'm biased to the upside," said Stephen Briggs, commodities analyst at BNP

Paribas in London.

Oil's benchmark Brent crude in London closed down 18 cents at $111.76 a barrel. The market turned negative after data from the U.S. Energy Information Administration showed gasoline inventories rose 7.4 million barrels last week.

In the gold market, the spot price of bullion was a touch lower at around $1,657 an ounce on worries that the Fed was considering slowing or stopping its quantitative easing (QE) that investors have figured into their economic outlooks.

The Fed's December policy meeting minutes showed several

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