Oil Ekes Out Small Gain On US Stimulus

By Glenn Dyer | More Articles by Glenn Dyer

Oil futures reversed earlier losses to end Wednesday with a small gain, joining silver, copper and iron ore in the green, while gold fell.

Oil prices found support as Wall Street rose on hope for a coronavirus rescue package.

Meanwhile, US gasoline (petrol) production fell to 8.96 million barrels a day for the week ended May 20, from 9.97 million barrels a day a week earlier, according to weekly data from the Energy Information Administration.

The worries about the global impact of the virus on energy demand and the price/volume war between Saudi Arabia, Russia and American frackers, still weigh on markets.

On Tuesday Chevron, the second biggest US oil group, revealed a $US4 billion cut in spending, with most of that on its acreage in the Permian Basin on West Texas and Eastern New Mexico.

Marketwatch.com said traders have been concerned that the COVID-19 shutdowns have led to less travel, and less demand for fuel, and the fall in gasoline production helped ease those worries.

May West Texas Intermediate oil rose by 48 cents, or 2%, to settle at a still weak $US24.49 a barrel in New York. April gasoline added 10.3 cents, or 23.2%, to 54.68 cents a gallon.

In Europe, Brent crude futures settled at $US29.99 a barrel, but edged back over $US30 a barrel in after hours trading.

The huge rally in gold and sliver ran out of steam on Wednesday as traders paused for a rethink in the wage of the US Congress agreeing on a $US2 trillion stimulus/support package.

Two days of sharp rises, including its largest percentage rise in more than a decade ended with Comex gold settled 1.7% or $US27.40 lower in New York at $US1,633.40.

Gold prices on Tuesday leapt 6%, the largest one-day dollar gain based on records dating back to November 1984, and biggest daily percentage rise since March 2009,

It was only gold futures that sold off on Comex.

May silver rose 61.6 cents, or 4.3%, to end at $US14.873 an ounce, after it soared 7.5%. May copper added another 1.1% to settle at $US2.204 a pound.

Meanwhile iron ore prices rose another 4% on Wednesday, closing up $US3.37 at $US87.34 for 62% Fe iron ore fines delivered to northern China.

There are growing fears the market will continue to be short of supplies with the governments of India and South Africa ordering shutdowns of all activities, including mining, for at least three weeks.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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