The ASX 200 fell 0.3% at the open, but the energy sector gained almost 2% by 11:00am AEDT after the US said it would release 50 million barrels of crude from its Strategic Petroleum Reserve.
Analysts said the move made little difference, as releasing reserves reduces the amount of oil above ground and could be easily countered by OPEC reducing exports. Brent crude was 3.3% higher.
A case of "sell the rumor, buy the fact" appeared to be in play as oil futures bounced higher after the White House announced the US and other countries would release crude from strategic reserves in an effort to push down energy prices.
“US gasoline prices reflect Brent since we import gasoline and blendstocks from overseas, especially into the the East and West Coasts,” said Kevin Book, managing director of research firm ClearView Energy Partners, according to Bloomberg.
Bets that the spread between WTI and Brent will widen further are increasing too. On Tuesday, 6.5 million barrels worth of crude traded on the chance that the spread widens past $5 within a few months time, Bloomberg data showed.
The US will release 50 million barrels of crude from its Strategic Petroleum Reserve, or SPR, while China, India, South Korea and the UK will tap their supplies. Talk of a coordinated release has hung over the oil market in recent weeks, with traders pricing in the potential for a large release, analysts said.
Oil initially extended a decline after the White House announcement, but then turned higher. West Texas Intermediate crude for January delivery advanced 2.3% to finish at $78.50 a barrel on the New York Mercantile Exchange. January Brent crude, the global benchmark, rose 3.3% to end at $82.31 a barrel on ICE Futures Europe.
Both benchmarks have seen four straight weekly losses, ending Friday at seven-week lows, according to Dow Jones Newswires.
Gold futures declined for a fourth straight session, with the precious metal falling to the lowest value in about three weeks, breaching the psychologically significant value at $1,800 again.
December gold shed 1.2% to settle at $1,783.80 an ounce, marking the lowest finish for a most-active contract since November 3, FactSet data show.
The slump comes as Treasury yields extend their rise in a holiday-shortened Thanksgiving week. US markets will be closed on Thursday in observance of Thanksgiving.
December gold futures traded 1.2% lower to settle at $1,783.80 an ounce, marking the lowest finish for a most-active contract since November 3, a day after the yellow metal sank 2.4% and logged the sharpest percentage drop since August 6, FactSet data show. The four-day slide also matched the longest string of declines since the period ended April 30, according to Dow Jones Newswires.