Crude oil advanced after a report showed that US inventories rose less than was predicted by analysts, while refineries increased their production. US stockpiles of crude grew just by 0.3 million barrels last week. Refineries boosted their capacity utilization by 1 percentage point to 82.8 percent. March futures for crude oil delivery rose $0.3 to $98.71 per barrel on NYMEX.
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US industrial production expanded 0.4 percent in December. The Empire State Manufacturing Survey showed that manufacturing advanced this month. There are more reports this week that should show positive developments in the US economy.

Futures for delivery of copper in three months advanced 1.6 percent to $8,372 per metric ton on LME, the highest settlement since September 21, before trading at $8,332.50. That was the fourth day of gains.
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Demand for German bonds on the auction yesterday was weak. Eurozone inflation fell from 3.0 percent to 2.8 percent last month, according to the preliminary estimate of Eurostat.

Earlier, crude was rising on growing tensions around Iran. Oil and copper were also rallying as manufacturing in the United States and China expanded.

February futures for delivery of crude was down $0.71 to $102.25 per barrel as of 00:43 GMT in electronic trading on NYMEX. Brent crude dropped from $113.65 to $113.05 per barrel as of 3:43 GMT today on ICE. Copper was down from $3.4700 to $3.4230 per pound, while gold went higher from $1,614.20 to $1,617.20 per ounce today on COMEX.
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Copper performed better on hopes that the US economic growth would outweigh the problems in Europe and the slowdown in China. The US PMI is expected to post a positive reading next week. The US economy grew 1.8 percent this year and analysts predict that it’ll expand 2.1 percent in 2011. Copper advanced from $3.4220 to $3.4315 per pound on COMEX.
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Global stockpiles fell 22 percent since March and were at the lowest level since October 2009 this month.

The European Central Bank injected money in Europe’s financial system by providing loans to European banks in an attempt to battle with the region’s crisis. Goldman Sachs Group Inc. predicted that Europe’s demand for copper will increase in the next quarter and prices will advance 26 percent in the next year.

The US economy continuously shows signs of improvement, improving prospects for industrial metals. Durable goods orders rose 3.8 percent in November after no growth was registered in October.

Copper rose from $3.4250 to $3.4470 per pound today on COMEX and earlier reached $3.4635 — the highest level since December 13.
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The European Union pledged €150 billion to the International Monetary Fund that the IMF will use to help in the battle with the region’s sovereign-debt crisis. The German Business Climate index unexpectedly increased to 107.2 in December from 106.6 in November, while analysts predicted it to drop to 106.2. Spain sold its three- and six-month bills at an auction yesterday, exceeding its maximum target.

The US housing starts increased from 627,000 to 685,000 and the building permits rose from 644,000 to 681,000 in November.

February futures for crude oil delivery advanced $3.19 to $97.24 per barrel on NYMEX. Brent oil was at $107.15 per barrel today as of 3:11 GMT on ICE after jumping from $104.30 to $107.00 yesterday. Gold advanced from $1,615.50 to $1,620.20 per ounce today on COMEX, following yesterday’s rise from $1,596.40 to $1,615.00. Copper traded near its opening level of $3.3720 per pound today, while the metal climbed from $3.3230 to $3.3640 yesterday.
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But in the absence of policy initiatives in the near future that stabilise credit market conditions effectively, Moody’s believes that the system remains prone to further shocks, which would likely lead to selective rating changes. As a result, Moody’s intention remains to revisit sovereign ratings of euro area and EU countries during the first quarter of 2012.

The Standard & Poor’s GSCI index of 24 commodities fell as much as 1.3 percent to close at 638.93 after earlier it reached 636.8, the lowest level since November 25.

Gold slumped from $1,707.50 to $1,663.90 per ounce on COMEX yesterday and traded today at $1,654.70. Silver slipped from $31.76 to $31.25 on the previous trading session. Copper was down from $3.5045 to $3.4460 per pound and traded today near $3.4435. Brent crude rose from $107.23 to $107.50 per barrel today on ICE after yesterday’s drop from $108.75 to $107.11 per barrel.
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Agricultural commodities, specifically corn, soybeans and wheat, haven’t joined the rally as the US Department of Agriculture boosted its forecast for the next year’s inventories. The outlook for the global stockpiles of corn was 4.6 percent higher than in the previous estimate, for soybeans 1.5 percent higher and for wheat 2.9 percent above the previous forecast.

January futures for delivery of crude oil advanced $1.07 to $99.41 per barrel on NYMEX, while Brent jumped from $107.78 to $108.68 per barrel today as of 21:48 GMT on ICE. Copper rallied from $3.4720 to $3.5560 per pound on COMEX. Corn fell from $5.8900 to $5.8500 per bushel, soybeans slumped from $11.3100 to $11.0575 and wheat traded near its opening price of $5.7675 after falling to $5.6775 today on CBoT.
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It’s not surprising to see commodities like oil and copper among the losers, but gold again unpleasantly surprised gold bulls. Analysts again named fears of deflation as a reason for the bearishness of gold. The previous high prices of the precious metal were caused by the expectation that central banks would start printing money, inflating the financial system. The ECB still refuses to do so and it doesn’t look like the US Federal Reserve is going to announce a quantitative easing anytime soon. That was a great disappointment for gold.

Brent crude oil traded at $108.07 per barrel today as of 2:00 GMT on ICE, following yesterday’s slump from $109.60 to $107.55 per barrel. Gold was near $1,711.90 per ounce on COMEX today after on the previous trading session it dropped from $1,742.0 to $1,707.90 per ounce. Copper slid from $3.5500 to $3.4755 per pound yesterday.
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And the market sentiment was positive earlier. France’s and Germany’s leaders has met to discuss the possible changes to the European Union treaties, aiming for stronger fiscal integration. Such talks made way to hopes that the summit on December 9 will bring some solid plans to resolve the Eurozone debt crisis. But the prospects for the European credit ratings downgrade erased the optimism.

Copper price was down today from $3.5400 to $3.5135 per pound as of 1:44 GMT on COMEX. The metal was up from $3.6000 to $3.6200 per pound yesterday before falling to the closing price of $3.5440.
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The industrial metal may still rebound on the optimism about Europe and the positive economic data from the United States. The US manufacturing PMI rose from 50.8 to 52.7 in November, while the construction spending advanced 0.8 percent, two times the forecast value.

Copper traded at $3.5315 per pound today as of 4:51 GMT on COMEX, following the yesterday’s drop from $3.5560 to $3.5255 per pound.
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There’s the speculation that the International Monetary Fund prepared a loan to Italy. The officials denied the rumors, but traders felt their mood improving. In general, Monday was a day of ”risk-on mode” and most of commodities rallied.

Unfortunately for traders, there are many reasons for the rally to be short-lived. Moody’s Investor Service warned that the indecisiveness of the European leaders may lead downgrades for the credit rating of the European countries. The rating agency wrote:

The continued rapid escalation of the euro area sovereign and banking credit crisis is threatening the credit standing of all European sovereigns, cautions Moody’s Investors Service in a new Special Comment. In the absence of policy measures that stabilise market conditions over the short term, or those conditions stabilising for any other reason, credit risk will continue to rise.

Futures for delivery of copper in March rose as much as 2.7 percent to $3.3715 per pound by 13:14 on COMEX.
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