Oil rally ends as gold stays up

OIL dropped from a six-week high last night after disappointing US economic data emerged along with an unexpected rise in crude inventories while gold had another stellar week.

The US Labor Department reported the number of Americans seeking jobless benefits last week rose by 12,000 to a one-month high while the Energy Information Administration's weekly crude inventory report showed crude stocks rising 1.69 million barrels last week to 363.1MMbbl while inventories at Cushing, Oklahoma, the delivery point for Western Texas Crude, climbed 194,000bbl to 37.6MMbbl.

Supplies of distillate fuels, including heating oil and diesel also rose, up 1.8MMbbl to 156.6MMbbl, the highest since mid-January.

Tradition Energy analyst Gene McGillian told Dow Jones Newswires traders should not read too much into one day's activity.

"I think we're consolidating here between $75 and $78 to see if we can make a run higher," he said.

"We've been tracking the financial markets pretty closely and when we get these poor economic numbers, we're going to react."

Meanwhile, spot gold closed at a record $US1246.82 an ounce overnight after earlier peaking at $1251.03/oz, slightly below its all-time record of $1251.80/oz last week. Today, the precious metal was trading at $1244.65/oz in late morning trade.

However, the same could not be said for base metals on the London Metal Exchange with most commodities sold on the back of concerns over a weakening in demand pressures in China.

Copper for three-month delivery shed 3% to $US6446.25 per tonne, while zinc fell 3.5% to $1764.75/oz, and nickel dipped 1.2% to $19,800/t.

Lead was the only metal to make gains, rising 0.2% to $1763.75/t.


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