Oil fell, gold rose as the Fed chair’s warning on the future health of the US economy reverberated around markets.
Oil prices fell on Wednesday, failing to find support on news from the US government of an unexpected weekly decline in domestic crude supplies, along with a fall in stocks at a key storage hub in Cushing, Oklahoma.
West Texas Intermediate crude for June delivery fell by 49 cents, or 1.9%, to settle at $US25.29 a barrel.
It briefly rose after the supply data from the US Energy Information Administration (EIA) but then dipped back int the red where it ended..
In Europe July Brent futures fell 79 cents, or 2.6%, to settle at $US29.19 a barrel.
The EIA reported Wednesday that US oil stocks fell by 700,000 barrels for the week ended May 8.
That was the first weekly decline in 16 weeks and defied forecasts by analysts for an average increase of 4.8 million barrels. An industry survey showed a larger rise.
The EIA data also showed crude stocks at the Cushing storage hub (for the WTI contract) fell by 3 million barrels last week to 62.4 million barrels. Working storage capacity at Cushing stands at around 76 million barrels.
Total US oil production fell by 300,000 barrels a day to 11.6 million barrels a day, the EIA said.
In its monthly outlook on Tuesday, the EIA forecast US crude output would average 11.7 million barrels a day this year. That would be down 500,000 barrels a day from 2019, it said.
That news should have boosted oil, but couldn’t. The warning about the ongoing strength of the US economy From fed chair Jay Powell had a larger impact on sentiment.
In metals, gold jumped and held its gains in the wake of the Fed chair’s warning but others fell.
Comex Gold futures rose as they held above the $US1,700-an-ounce mark for a second session.
June gold rose $US9.60, or 0.6%, to settle at $US1,716.40 an ounce.
Some trader’s reckon the Fed will be forced to introduce negative interest rates, but Powell ruled that out in his speech on Wednesday.
Donald Trump tweeted a rant on Tuesday about how negative rates were “a gift” to the US and should be introduced which seems toe why some traders believe negative rates will happen.
Comex July silver had early gains but fell in late trading to end 3.8 cents, or 0.2%, lower at $US15.671 an ounce.
And Comex July copper settled at $US2.346 a pound, down nearly 0.6% for the session.
Meanwhile Metal Bulletin prices show iron ore remained solid on Wednesday with the price for 62% Fe fines delivered to northern China easing 4 cents to $US91.63 a tonne.
