Oil futures slid further into negative territory on Wednesday (24 August) as the dollar strengthened ahead of US Federal Reserve chairwoman Janet Yellen's speech at the annual Jackson Hole Symposium and traders faced up to bearish US inventory data.
Crude stockpiles rose by 2.5m barrels stateside to a total of 523.6m barrels in the week ending 19 August, according to the US Energy Information Administration, contrary to a Reuters analysts' poll predicting a 455,000-barrel fall.
In response, the Brent front-month futures contract was down 1.88% or 94 cents to $49.02 per barrel at 5.05pm BST. Concurrently, the West Texas Intermediate fell 2.85% or $1.37 to $46.93 per barrel. Nonetheless, both contracts remain in a technical bull market having risen by over 20% since their last low point earlier in August.
Fawad Razaqzada, market analyst for Forex.com, said media reports that suggested Iran was willing to co-operate with other large crude producers in a potential deal to curb oil output and boost prices made the difference overnight.
"In a way, it was almost a repeat of what was happening earlier in the year when oil prices would jump on such headlines only for the gains to quickly evaporate on realisation that Iran was actually not going to be part of any deal. Then the buck-denominated oil prices had the additional support of a depreciating dollar, as well as the declining US rig counts and oil production. This meant that when talks between Opec and Russia to freeze oil output failed, crude prices were able to rally anyway after a brief sell-off."
Meanwhile, precious metals slid across the board dragged lower by gold, as the dollar strengthened ahead of Yellen's speech and stronger US housing data. At 5.26pm BST, the Comex gold futures contract for December delivery was down 1.10 % or $14.80 to $1,331.30 an ounce.
Comex silver futures fell 1.81% or 34 cents to $18.58 an ounce, while spot platinum registered a 2.22% or $24.50 drop to $1,079.78 an ounce, but the spotlight remained on gold as dollar bulls remained in full force.
FXTM research analyst Lukman Otunuga said: "Hawkish remarks from Yellen could install bulls with inspiration, consequently sending the Dollar Index higher and spell further bad news for gold."