Crude Rebounds on Drop in Gasoline Inventories, Weak Dollar Stabilizes Gold, Natural Gas Falls as Forecast Turns Warmer

Crude oil and gold rebounded on Wednesday after early weakness, and natural gas tumbled as warmer weather trends for later in the month crept into the forecasts. The catalyst for the turnaround in crude and gold may have been a weaker dollar, which retreated after U.S. Treasury yields tumbled, driving down demand for the greenback.

At 20:42 GMT, April WTI crude oil is trading $56.22, down $0.34 or -0.60%. April Comex gold is at $1287.80, up $3.10 or +0.24% and April natural gas is trading $2.846, down $0.038 or -1.32%.

Crude Oil

U.S. WTI and international-benchmark Brent crude oil futures posted a choppy performance on Wednesday, first dropping sharply then clawing back most of those losses into the close.

Early in the session, crude oil was pressured by follow-through selling related to a bearish inventories report late Tuesday from the American Petroleum Institute. Crude oil was also pressured by weakness in the stock market tied to renewed concerns over a U.S.-China trade deal.

Crude oil bottomed shortly after the release of the U.S. Energy Information Administration’s weekly inventories report at 15:30 GMT. Although U.S. crude inventories rose by 7.1 million barrels in the week-ending March 1, greater than the 1.2 million barrel build forecast, prices rose in response to 4.2 million barrel drop in gasoline inventories, and a decline in distillate fuel including diesel of 2.4 million barrels.

A softer U.S. Dollar also helped drive up foreign demand for dollar-denominated crude oil.

Gold

Gold futures steadied into the close on Wednesday after hovering near a five-week low touched the previous session. A weaker U.S. Dollar and U.S. equity markets encouraged short-sellers to book profits after the recent steep sell-off.

Equity markets weakened as investors continued to pare positions as they awaited fresh news over a U.S.-China trade deal. Position-squaring in the Euro ahead of Thursday’s European Central Bank interest rate and monetary policy decisions helped support the single-currency while driving down the dollar index. This helped provide some light support for dollar-denominated gold.

Position-squaring and profit-taking ahead of Friday’s U.S. Non-Farm Payrolls report also help limit the selling pressure. A steep drop in U.S. Treasury yields also helped weaken demand for the dollar. The spike to the downside in yields was likely in response to the mixed messages on the progress of talks between Washington and Beijing over the last few days, and some concerns over the jobs report.

Natural Gas

Natural gas futures were pressured by reports of an easing of the current extreme cold temperatures hitting several key demand areas. Cold temperatures continued to dominate the country on Wednesday, but forecasts show the cold will ease across the East late this week, then warming above normal this weekend. Next week’s forecast is calling for a mix of temperatures, leading to a forecast of neutral demand.

The weather forecasts suggest the market may become rangebound since they are not bearish enough to trigger a steep break, but not bullish enough to continue to scare weak shorts out of their positions.