Commodity Blog

Commodity Prices – Oil

Wheat posted the biggest gain in more than two weeks as adverse weather in the United States threatens to curb output. The US Department of Agriculture estimated that 52 percent of crops were in good or excellent condition as of May 13 the Kansas, the biggest US grower, down from 60 percent in the week before. Dry weather in parts of Russia and Ukraine is expected to further reduce supply of the grain. Wheat climbed from $5.9525 to $6.0700 per bushel as of 21:09 GMT on CBoT today, posting the biggest gain since April 27.

Oil and rubber fell on political turmoil in Greece. Greek political parties failed to form a new coalition government, resulting in new election. Polls show that many Greeks favor parties that stand against austerity measures demanded from the European Union and the International Monetary Fund in exchange for a bailout. Greece may leave the eurozone and the resulting fear harm markets. Futures for delivery of crude oil in June fell $0.8 to $93.98 per barrel on NYMEX, the lowest price since December 19. Brent crude advanced from $111.13 to $111.86 on ICE today. The futures for delivery of rubber in October tumbled as much as 5.1 percent to $3,317 per metric on the Tokyo Commodity Exchange, the lowest settlement for a most-active contract since January 6.

Commodities continue to be beaten by the crisis in Europe. Oil extended its decline and gold erased this year’s gains as the dollar strengthened on the European problems, pushing commodity prices down. Greece is still unable to form a coalition government and talks about the country leaving the eurozone are becoming more serious as European politicians consider such outcome as a reality perhaps for the first time.

Crude oil has its own bearish story as Ali al-Naimi, the Saudi Arabian Minister of Petroleum and Mineral Resources, continues to call for lower prices. And it looks like he is serious about it as the Organization of the Petroleum Exporting Countries reported that Saudi Arabia ramped up production to the highest level at almost three decades.

June futures for delivery of crude oil dropped as much as $1.35 to $94.78 per barrel on NYMEX today, the lowest price since December 19. Brent grade of crude was down from $111.94 to $111.04 per barrel as of 21:19 GMT on ICE today, following the decline to $110.04 — the lowest settlement since January 25. Gold price slid from $1,563.10 to $1,561.90 on COMEX today — the lowest level since December 30.

These three short videos show what analysts expect of the week starting May 14 for gold, silver and oil. All of the commodities demonstrated bearish trends and the videos show potential downside targets in case the trends would persist. Additionally, the conditions under which the bearishness may be broken are also discussed.

Soybeans gained today after three sessions of losses on speculation that adverse weather in South America will bolster demand for US exports. The US Department of Agriculture predicted that soybean exports from the United States will climb 14 percent. The Department estimated that US stockpiles of the grain will shrink to 145 million bushels by August 31, 2013, from this year’s 210 million. Soybeans jumped from $14.2775 to $14.4700 per bushel as of 20:05 GMT today on CBoT.

Oil was down today extending its losses after the US Energy Department reported yesterday that US stockpiles grew. US inventories of crude climbed by 3.7 million barrels to 379.5 million barrels last week — the highest level since 1990. Rumors that Saudi Arabia boosted output were also negative for oil prices. Brent crude fell today from $112.73 to $112.57 per barrel on ICE.

Commodities declined today, threatening to erase this year’s gains, as the problems continue to haunt Europe. Greece is a particular concern, being the most indebted member of the European Union. The country failed to form the government after the election on the weekend, fueling fears that Greece may leave the eurozone. The Standard & Poor’s GSCI Spot Index dropped for the fifth consecutive day.

Crude oil had its own bear story on top of Europe’s woes as Saudi Arabia signaled that prices for the commodity are high. Saudi Arabian Oil Minister Ali al-Naimi said that the prices are “still a little bit high”. Such comments are likely mean that the world’s biggest oil exporter is going to boost its production.

June futures for delivery of crude oil slipped $0.93 (0.9 percent) to $97.01 per barrel on NYMEX. Brent fell from $113.33 to $110.53 per barrel before trading at $113.14 as of 21:05 GMT today on ICE. Gold dropped from $1,636.70 to $1,604.00 per ounce on COMEX today, reaching $1,596.00 intraday — the lowest settlement since January 4. Sugar tumbled from $0.2105 to $0.2033 per pound on ICE, while the daily minimum of $20.31 was the lowest since September 1, 2010.

Soybean futures gained today as adverse weather hurt crops in Argentina and Brazil, boosting demand for US exports. The US Department of Agriculture reported that the United States were selling about 100,000 of metric tons daily, rising 10 times since the beginning of April. China was the biggest buyer. Soybeans closed at $14.7450 per bushel today on CBoT, following the drop from $14.6825 to $14.5800.

Crude oil slumped today as growth of US nonfarm payrolls was much smaller than was predicted by analysts. The payrolls rose just by 115,000 in April, while an increase of 173,000 was expected. That confirmed the earlier data that showed slowdown of US employment growth. The report fueled concerns that the global economic recovery is faltering. June futures for delivery of crude oil dropped as much as $2.11 to $100.43 per barrel (the lowest since February 14) before trading at $100.66 as of 13:46 on NYMEX today. Brent oil fell from $116.09 to $113.20 per barrel on ICE after touching $111.76 — the lowest price since February 2.

Crude oil slumped today on concerns that the European crisis will hurt the global economic growth and will damp demand for commodities. European Central Bank President Mario Draghi left the key interest rate unchanged and said on the press-conference today that there are downside risks.

Tom Bentz, a director at BNP Paribas Prime Brokerage, commented:

There are still a lot of worries about Europe. Some of the latest comments from the ECB are indicating downside risk but they are not looking to do anything at this time.

Markets remain depressed by yesterday’s negative data from the United States. US inventories of crude swelled to the 21-year high of 375.9 million barrels. On the positive note, US unemployment claims fell from 392,000 to 365,000 last week, more than was anticipated by analysts.

June futures for delivery of crude slid as much as $2.65 (2.5 percent) to $102.57 per barrel by 13:53 on NYMEX. Earlier, the price posted the biggest intraday decline since April 4, falling to $102.46. Brent crude slipped from $118.25 to $115.99 per barrel as of 18:55 GMT on ICE today, touching $115.93 intraday — the lowest price since February 8.

Crude oil fell on speculation that US inventories will advance to a highest level in 21 years. Analysts estimated that stockpiles climbed 2.5 million barrels to 375.5 million last week. The report from the Energy Department will be released tomorrow.

Demand for oil may wane as the global economic growth is slowing. Reports showed that manufacturing in China rose less than expected and business activity in the United States slowed. Spain’s gross domestic product fell 0.3 percent in the first quarter of this year, following the same rate of decline in the previous quarter. Two quarters of economic decline means the country has entered the recession.

Futures for delivery of crude in June fell $0.15 to $104.72 per barrel on NYMEX. Brent crude dropped from $119.65 to $119.47 per barrel yesterday on ICE and traded today at about $119.28.

Crude oil futures advanced today as growth of US household spending overshadowed slower-than-expected economic growth. US gross domestic product rose 2.2 percent in the first three months of 2012, compared to expectations of a 2.6 percent increase. Personal expenditures increased 2.9 percent in the first quarter of this year, up from 2.1 percent in the previous quarter. The average forecast was 2.3 percent. Crude oil contract for June delivery rose $0.38 cents to $104.93 per barrel on NYMEX, the highest price since April 2, while over the week prices were up 1.8 percent. Brent oil advanced from $119.58 to close at $119.70 per barrel today on ICE.

Gold price rose today as central banks and hedge funds boosted their purchases of the precious metal. The International Monetary Fund reported that Mexico, Russia and Turkey expanded their reserves by 44.8 metric tons valued at $2.4 billion in March. Prices for gold rose as Federal Reserve Chairman Ben Bernanke stated that the Fed will continue to stimulate the US economy. The comments weakened the dollar, bolstering raw materials. Many analysts believe that gold would gain next week. Gold spot prices increased by $$4.40 to close at $1,664.00 per ounce today on COMEX.

Cattle futures climbed today, following yesterday’s drop. Futures fell yesterday after a case of bovine spongiform encephalopathy (or simply mad cow disease) was discovered in the United States. Four biggest importers of US meat (Canada, Japan, Mexico and South Korea) said that they will continue to buy US beef, causing prices to rebound today. Live-cattle futures for delivery in June rose as much as 1 percent to $1.12675 per pound as of 11:01 on CME, following yesterday’s drop by the exchange’s 3-cent limit to $1.11575.

Crude oil advanced today after the Federal Open Market Committee said that the US economic recovery will gradually accelerate over time. The FOMC left the monetary policy unchanged today and said in the statement that it “expects economic growth to remain moderate over coming quarters and then to pick up gradually”. US crude oil inventories increased by 4.0 million barrels, while total motor gasoline inventories decreased by 2.2 million barrels last week. June futures for delivery of crude oil advanced $0.84 (0.8 percent) to $104.39 per barrel by 13:33 on NYMEX, while earlier it reached $104.57, the highest level in a week. Brent crude climbed from $118.33 to $119.08 per barrel as of 18:33 GMT on ICE today, while earlier it declined to $117.45.

Gold fell as demand remained low despite the festival in India that is considered to be a good time to buy precious metals. The uncertain political situation in France and Netherlands also damps demand for the metal. On the other hand, data shows that central banks across the world continue to buy gold for expanding their reserves. Gold price fell from $1,641.30 to $1,629.90 on COMEX today.