West Texas Intermediate crude extended its rally on Wednesday as gold retreated. New data showed that U.S. oil supplies grew at a much slower rate than expected, dragging down demand for haven assets like gold.
Crude oil for April delivery rose $1.16 (3.18%) to trade at $37.66 a barrel on news of the inventory data. Prior to the data release, prices were still hovering around $37.20 a barrel.
The U.S. EIA (Energy Information Administration) announced in its weekly report that crude oil inventories had increased by 3.9 million barrels last week. Analysts were expecting supplies to rise by 3.9 million barrels, but the Petroleum Institute’s report showed a supply gain of 4.4 million barrels.
As of last week, U.S. crude oil inventories were still at an all-time high, reaching 521.9 million barrels.
In Cushing, Oklahoma, supplies rose by 690,000 last week, increasing concerns that the largest storage facility in the U.S. is reaching full capacity.
The latest report also showed gasoline inventories decreasing by 4.5 million barrels. Analysts were projecting a decline of 1.4 million barrels. Distillate stockpiles dropped by 1.1 million barrels.
Nymex oil prices have rebounded by 33% since dropping to a 13-year low of $26.05 in February as a declining shale production in the U.S. is boosting sentiment.
Brent futures also saw gains, climbing 30% since February’s low.
Gold prices, meanwhile, had soared up to a 13-month high of $1,280.70 last Friday, but a rise in oil prices has pushed gold prices lower over the last two sessions. Recent employment data showed job growth but low wages, which pushed investors to readjust their expectations of how quickly the Federal Reserve would raise rates this year.
Gold for April delivery dropped $12.20 (0.96%) to a low of $1,250.00 a troy ounce before rebounding to $1,254.00. Prices are still down 0.7%, or $8.90, on the day.
Silver futures for March delivery fell 5.9 cents (0.38%) to $15.32 a troy ounce. Copper futures also eased, falling 0.6 cents (0.27%) to $2.228 a pound.
Despite the decline, gold is still up nearly 18% so far in 2016, as investors flock to safe havens in volatile global financial markets.