Crude oil
Crude oil futures closed slightly lower on Wednesday, as the US dollar strengthening, positive economic reports and the rising US fuel inventories offered conflicting signals to the oil market.
According to the trading results on the New York Mercantile Exchange, September light sweet crude oil quotations dropped by 8 cents, or 0.1%, to $82.47 a barrel. Brent crude futures decreased by 58 cents, or by 0.7%, to $82.10 a barrel. Separate reports demonstrating faster-than-expected growth in the U.S. non-manufacturing sector as well as an increase in private sector employment tugged oil prices in two directions. Investors encouraged by signs of the economy improvement bought equities and some commodities. Crude futures have risen and fallen with those markets and even overcame the recent growth in shares by strengthening by more than 7% in the last week. However, the data also eased fears the US Federal Reserve would turn to monetary stimulus to keep the recovery on track. In the result, the greenback increased to 1.3161 recently against the euro, from 1.3240 earlier. A stronger buck makes oil more expensive to purchase using other currencies. The oil rally was also cut short by an unexpected climb in U.S. gasoline inventories seen in data released by the Energy Information Administration. The report showed gasoline stocks rising 700,000 barrels, while average analyst expectations had been an 800,000-barrel shrink. Distillate inventories, including heating oil and diesel rose by 2.2 million barrels, double the forecast. U.S. demand was barely above year-ago levels, too low to consume the fuel produced by refiners operating at 91.2% of capacity, close to their highest rate in three years.
Gold
Talks about further easing the US monetary policy and the Chinese demand possible growth on Wednesday pushed gold futures to the highest level in almost three weeks.
December gold futures were $8.40 up, or 0.7%, to $1195.90 an ounce, the highest closing level since July 15. Gold futures have advanced for six consecutive sessions, caused by buying at lower price, when prices declined to a three-month low. Recently, gold prices have been rising by the likelihood of increased refuge demand if the economic recovery remains unsteady. Gold was supported on Wednesday by speculation that the US Federal Reserve System can lower interest rates or buy bonds to support the economy. Even symbolic action by the Fed could send a signal that authorities believe the economy is at risk of deflation or a renewed recession, enhancing the appeal of gold as an alternative asset. Gold is sometimes bought as a hedge instrument during weakness in other markets. Gold futures also got support on Wednesday from the news that China would take steps to expand its domestic gold market. On Tuesday, the People's Bank of China announced that the government would permit more banks to export and import gold. Analysts say the easing of restrictions should not immediately lead to an increase in gold investment, but it represents an expansion, which can make China a larger player in the international gold market.