Commodity Blog

Posts Tagged ‘European Central Bank’

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.

Corn jumped today in the longest rally this year on concerns about dry weather in South America. Commodity Weather Group predicted that about 50 percent of the crops in Argentina will be dry in the next 10 days and about a third of Brazil’s crops will also suffer from drought. Corn advanced from $6.3200 to $6.4125 per bushel today as of 23:32 GMT on CBoT and reached $6.4625 earlier — the highest price since November 16.

Oil declined as concerns about the European debt crisis intensified. The European Central Bank boosted lending to banks of the eurozone, spurring speculation that the European financial system is failing. February futures for crude oil delivery dropped $1.98 to $99.36 per barrel on NYMEX. Brent crude declined from $109.06 to 107.41 per barrel today on ICE after falling earlier to $106.77.

Copper gained today as global inventories declined, while demand is expected to pick up.

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.

Commodities slumped yesterday after the European Central Bank signaled that it’s not going to expand its bond purchases. The central bank took steps for helping the eurozone by lowering its main interest rate by 25 basis points and it also announced measures to support the bank lending and money market activity. But market participants were disappointed as they were hoping for more involvement from the ECB.

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.

Gold fell today, following yesterday’s advance, as the optimism for the eurozone again emerged. The European Central Bank will hold the monetary policy meeting today and many analysts believe that the Bank will cut its interest rates to reduce the pressure on the most indebted economies of the European Union. The precious metal rallied yesterday as France and Germany again showed disagreement in their approaches to battling the debt crisis. Gold was down today from $1,742.00 to $1,737.70 per pound as of 3:04 GMT on COMEX, following the advance from $1,730.60 to $1,741.00 per pound yesterday.

Oil hasn’t profited from the reemergence of the optimism as the US crude oil inventories unexpectedly rose last week. The stockpiles grew 1.3 million barrels to 336.1 million barrels. Forecasters predicted a decline by 800,000 barrels. January futures for delivery of crude oil rose $0.19 to $100.30 per barrel in electronic trading on NYMEX. Brent was down from $109.60 to $109.35 today on ICE after it fell from $110.70 to $109.50 yesterday.

Crude oil jumped as the prospects for new leadership in Greece and Italy spurred hopes that the European debt crisis can be contained. Traders still have mixed feelings about these new developments in the Eurozone situation and crude retreated somewhat at the start of today’s trading.

Greek Prime Minister George Papandreou agreed to step down. The ruling and opposition parties formed a unity government that may deal with the political obstacles on the way to getting new portion of the bailout.

There is a mounting pressure for Italian Prime Minister Silvio Berlusconi to resign as well. Prime Minister’s former spokesman Giuliano Ferrara claimed that Berlusconi will leave the office soon. Berlusconi declined such rumors.

Juergen Stark, member European Central Bank’s Board, said that the sovereign-debt crisis in Europe will be contained in two years.

Crude oil rallied from $112.41 to $114.88 per barrel yesterday and traded today near $114.42 per barrel as of 3:21 GMT on ICE.

Commodities gained today as Greece rejected the planned referendum and the European Central Bank lowered its key interest rate. Crude oil and wheat were among the gainers.

The referendum, promised by Greek Prime Minister George Papandreou, threatened the stability of the Eurozone. Some of the European leaders even spoke about expelling Greece from the European Union. Now tensions receded, reinvigorating markets.

Economists expected the ECB to keep the interest rates unchanged today. Many market participants were concerned that the rates are too high for the strained economy of the EU. The central bank, lead by its new President Mario Draghi, surprised everyone by cutting the main minimum bid rate by 25 basis points to 1.25 percent.

Wheat was down yesterday as the record harvest boosted the global stockpiles. International Grains Council estimated that output will increase 5 percent to 684 million metric tons in the 12 months ending June 30, pushing inventories to the highest level in a decade. The supply expanded as major wheat exporters, such as Russia and Ukraine, resumed their shipments after the drought last year.

Wheat was up today from $6.2300 to $$6.3575 per bushel as of 22:27 GMT on CBoT, following yesterday’s decline from $6.2900 to $6.2225 per bushel. Spot price for Brent crude jumped today $109.11 to $110.83 per barrel today on ICE, rebounding from the daily low of $107.83 per barrel.

The concerns about the credit crisis in the European Union continue to haunt markets and that helps to support prices for precious metals. Great Britain also has its share of problems that spur investors to buy precious metals as a safe haven.

Both the Central European Bank and the Bank of England left their interest rates unchanged, but expanded their bond purchases programs. The same monetary policy decision had a vastly different effect on currencies of the nations, boosting the euro, but weakening Britain’s sterling. Yet the fact the policy makers of European Union and Britain embarked on quantitative easing undoubtedly means problems in both of these regions and that’s beneficial for safer assets, like gold and silver.

The BoE was rather dovish in its outlook:

The weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.

The ECB wasn’t optimistic, either:

The underlying pace of monetary expansion continues to be moderate. Ongoing tensions in financial markets and unfavourable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of this year. The economic outlook remains subject to particularly high uncertainty and intensified downside risks.

Gold advanced from $1614.0 to $1652.0 per ounce on COMEX today as of 18:13 GMT on COMEX, rising for the second day. Spot price for silver jumped from $30.46 to 32.11 per ounce. Platinum settlement climbed from $1478.0 to $1507.0 per ounce.

Commodities, including crude oil and corn, gained today as prospects for the US and European economies improved, making traders more willing to invest into riskier assets.

The speculation about recapitalization of the European Union banks and hopes that the European Central Bank would support the region’s economy reduced concerns about the debt crisis in Europe.

The sentiment about the economy of the United States improved after Federal Reserve Chairman Ben Bernanke signaled about possible implementation of another round of stimulating measures. The outlook for the American economy further improved after the ADP employment report showed the growth by 91,000 working places, compared to the median forecast of 76,000. The non-farm payrolls will be released on October 7 and economists think they will show an increase by 51,000 jobs. Employment was the major concern for the US policy makers for a long time and improvement of this sector is definitely a good sign.

Crude oil also gained as the US inventories decreased by 4.7 million barrels to 336.3 million barrels last week instead of rising by 1.0 million as was expected.

Futures for delivery of corn in December gained $0.1225 (2.1 percent) to $6 per bushel as of 10:22 on CBoT. November futures for delivery of crude oil jumped as much as $3.54 (4.7 percent) to $79.21 per barrel by 13:42 on NYMEX.

The optimism for the European economy, which was caused by yesterday’s announcement of the European Central Bank, quickly waned today. As a result, gold posted the biggest gain and oil showed the biggest drop this week as risk appetite went away.

The ECB announced yesterday that it’ll sell dollar to the European banks in the joint effort with other central banks of the developed nations. The European Union finance ministers said at today’s meeting that they won’t support the lenders. Finland may halt the bailout for Greece by the demand of collateral. The European leaders rejected the offer of US Treasury Secretary Timothy Geithner to perform tax cuts and spending increase, arguing that the debt crisis made such actions impossible.

October futures for delivery of crude oil slid $1.54 (1.7 percent) to $87.86 per barrel by 12:28 on NYMEX. November Brent crude subtracted $0.18 to $112.12 per barrel on ICE. Contract for delivery of gold in December jumped $33.30 (1.9 percent) to $1,814.70 on COMEX by 13:49 in New York, showing the biggest advance since September 8.