Commodity Blog

Commodity Prices – Oil

Copper gained as China announced plans to support housing in the country. The metal is used in construction of building, therefore such plans will likely lead to an increase of demand. Futures for delivery of copper in March rose 0.9 percent to close at $3.9095 per pound COMEX.

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.

Crude oil climbed today as the dollar fell. The drop of the greenback was caused by a testimony of Federal Reserve Chairman Ben Bernanke. Bernanke suggested that the US jobs market is weaker than the recent very positive data indicated.

Today, the US Energy Department boosted its forecast for crude oil prices to $100.40 per barrel this year, compared to the January estimate of $100.25 per barrel. Analysts expect tomorrow’s report to show an increase by 2.9 million barrels of US inventories of crude last week, while growth was 4.2 million in the week before.

March futures for delivery of crude oil gained as much as $1.50 to $98.41 per barrel on NYMEX.

Crude oil fell today as traders are concerned that Greece wont’ be able to reach an agreement about the next portion of aid. The European Union, the European Central Bank and the International Monetary Fund demand more budget cuts from Greece, but the country may be unable to accept such demands. Greek officials claim that they are close to reaching an agreement, but many market participants remain worried that such claims are empty.

London-traded Brent grade of oil performed vastly different from its New York-traded counterpart. That’s an unusual behavior as most of the time all types of oil are influenced by same fundamentals. Rising demand for Brent can be explained by forecast of below-normal temperatures in Europe. Additionally, a militant group in Nigeria damaged pipeline that belongs to Italian company, resulting in a loss of 4,000 barrels per day of production.

Futures for delivery of crude oil in March dropped $0.93 to $96.91 per barrel on NYMEX. At the same time, Brent oil rose from $115.00 to $116.52 per barrel, the highest settlement since September 8, as of 20:43 GMT today on ICE.

Crude oil rallied today together with other commodities, while gold declined as traders preferred riskier assets. The major news topic today was US employment that was much better than analysts predicted.

US nonfarm payrolls rose by 243,000 jobs in January. That’s compared to the average forecast of 150,000 and the December growth by 203,000. The unemployment rate fell to 8.3 percent, making a pleasant surprise for market participants, who expected it to stay at 8.5 percent.

Carsten Fritsch, analyst at Commerzbank, spoke about the positive impact of the news, but also mentioned a negative side of the employment growth regarding commodity prices:

The jobs data shows the economy is gaining momentum. This is bullish for risk appetite and therefore for commodity prices. However, it may limit the scope for a third round of quantitative easing, and this may limit gains.

March futures for delivery of crude oil gained $1.11 to $97.47 per barrel before trading at $96.89 by 13:42 on NYMEX. Spot price for Brent crude went up from $112.50 to $113.34 per barrel as of 17:41 GMT today on ICE. Gold dropped from $1,758.70 to $1,736.70 on COMEX today.

Crude oil and gold, as well as other commodities, jumped after the Federal Reserve maintained interest rates near zero and pledged to keep borrowing costs record low at least till late 2014. Such move was considered a ”light” version of quantitative easing. It weakened the dollar and boosted commodities priced in the US currency. March for delivery of crude oil advanced $0.66 to $100.06 per barrel on NYMEX. Brent went higher from $110.45 to $110.74 per barrel on ICE today as of 6:41 GMT. Gold was up from $1,666.50 to $1,711.00 yesterday and traded at $1,710.80 today on COMEX.

Wheat was also higher on dwindling Russian stocks. Inventories of some Russian regions declined by more than 50 percent, while other regions shipped almost all of their supplies as exports picked up. Wheat climbed from $6.4075 to $6.4650 per bushel on CBoT today.

Oil fell yesterday on concerns about the credit woes of European countries that may derail global economic growth. Today prices rebounded somewhat as tensions about Iran still provide support for the commodity.

Discussion among Greece and private bondholders about a debt haircut ended in a stalemate. The country offered very low interest rates on its bonds that creditors didn’t wish to accept. The bad outcome of the talks spoiled market sentiment that previously was lifted by speculation that European lawmakers devised plans for battling the debt crisis.

Iran still may disrupt supply of crude, but analysts think that such move is already priced in. Analysts estimated that US inventories of crude oil grew 0.9 million barrels last after falling 3.4 million barrels in the week before. A report from the Energy Information Administration about stockpiles will be released later today.

March futures for delivery of crude oil rose $0.24 to $99.19 per barrel in electronic trading on NYMEX after falling $0.63 to $98.95 yesterday. Brent rose from $110.24 to $110.52 per barrel as of 4:11 GMT today on ICE, following the drop from $110.84 to $110.33 yesterday.

Crude oil futures rose today as the growing economy of the United States reduced nation’s inventories and on concerns that Iran may disrupt supply by blocking the Strait of Hormuz.

US commercial crude oil inventories declined 3.4 million barrels last week. An increase by 2.9 million was predicted by specialists. Currently the stockpiles stand at 331.2 million barrels.

Mohammad Khazaee, Ambassador of Iran to the United Nations, explained:

There is no decision to block and close the Strait of Hormuz unless Iran is threatened seriously and somebody wants to tighten the noose. All the options are, or would be, on the table.

February futures for delivery of crude oil rallied by $1.42 to $102.01 per barrel in electronic trading on NYMEX before trading at $101.74 as of 13:03. Brent went from $111.53 to $112.01 per barrel today as of 5:24 GMT on ICE.

Commodities advanced today as German economic confidence improved, while China’s economic growth slowed, spurring speculation about stimulus. Oil, corn and soybeans were among gainers.

China’s gross domestic product increased 8.9 percent in the fourth quarter of 2011, following the 9.1 percent expansion in the third quarter. That was the slowest growth in 10 quarters. The report fueled talks that the country will perform measures to stimulate economic growth.

ZEW Economic Sentiment for Germany increased from -53.8 to -56.1 (month-on-month) in January, the highest level since July 2011. Economic expectations for the eurozone improved to -32.5 this month from -54.1 in the month before.

Standard & Poor’s downgraded credit ratings of several European countries on January 13. Markets were downbeat somewhat after the action, but quickly recovered as such move was expected and generally priced in.

February futures for delivery of crude oil advanced $2.01 (2 percent) to $100.71 per barrel on NYMEX. Brent oil rose from $111.42 to $111.57 per barrel as of 23:54 GMT today on ICE. Corn price was higher from $6.0125 to $6.0600 per bushel on CBoT today, while soybeans rallied from $11.6300 to $11.8275 per bushel.

Crude oil declined today as threat of sanctions against Iran lessened. There are rumors that the International Atomic Energy Agency will discuss with Iran its nuclear program. In the meantime, European Union officials said that an embargo on Iranian oil exports may be postponed for six months. There is no more rush to buy oil and prices reacted accordingly. February futures for crude oil delivery slipped $0.79 (0.8 percent) to $98.31 per barrel by 13:36 on NYMEX. Brent oil declined from $111.01 to $110.91 per barrel as of 20:53 GMT today on ICE, while earlier it touched $109.71 — the lowest price since January 3.

Cattle advanced as demand for beef rose, while supply decreased. Beef price increased 5 percent in the United States this year, following the 10 percent increase in 2011. Beef exports jumped 25 percent in the 10 months ended October 31 from a year ago, while cattle herds were record small last year. April futures for cattle delivery rose 0.9 percent to $1.264 per pound at 13:00 on CME.

Cocoa futures posted the biggest gain since October 2009 as a strike in Nigeria threatened to disrupt shipments. The strike of Nigerian workers that started today may lead to ports shutting down. Nigerian farmers stopped selling crops after fuel prices doubled and the government removed fuel subsidies, while prices for crops fell 40 percent. Cocoa spot price climbed from $2,033 to $2,171 per metric ton on ICE as of 22:02 GMT today and reached $2,199 earlier.

Crude oil fell today after a report showed that German industrial production declined. Germany’s output dropped 0.6 percent in November, following the 0.8 advance in October. Oil also slid on easing concerns that Iran would disrupt oil supplies from the Persian Gulf. February contract for delivery of crude oil slipped $0.25 to $101.31 per barrel on NYMEX, the lowest price this year. Brent oil declined from $113.42 to $112.33 on ICE.