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Daily Commodities Fundamentals: Crude Loses 6.5%, Leads Other Commodities Downward

North American Commodity Update, Last Updated 7/29/2009 4:20 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Tank Amid Continued Demand Concern

Crude Oil (WTI)   $62.890                         -$4.340                             -6.46%
After adding nearly $10-per-barrel over the past two weeks, Crude Oil future prices plummeted straight through the psychological $65 level to close below $63. The 6.5% decline marks the biggest intraday loss for the commodity since mid-April. Crude’s descent continued from yesterday, picking up steam early in the US session following the release of a disappointing US Durable Goods Orders report, which showed a 2.5% pullback as opposed to the expected -0.6% change . Durable Goods, by definition, last over three years, so many investors use their growth rate as an indication of future growth. At 10:30 AM EST, the Department of Energy published its Crude Oil Inventory figure, which was the catalyst for today’s extreme price movement. Stockpiles increased by nearly 5.5 million barrels last week despite analyst expectations of a 1.5 million barrel reduction. Demand for Crude had already been week this summer, but investors had ignored this fact when bidding up future prices; the alarming figure from the DOE forced the market to succumb to the basic economic principle of supply and demand. Though slight retracements have been well-documented after such significant price declines the fundamental concerns remain; Crude could begin to fall back to mid-July lows and re-test $60 later this week.

Department of Energy Inventories

Commodities – Metals

Gold Slips, Silver Falls on Weak Day for Precious Metals

Gold                   $929.400                           -$9.700                           -1.03%
Relatively speaking, Gold prices held steady during today’s trading, losing only 1% intraday. After a new batch of disappointing fundamental data reports, the dollar began to climb against its major competitors as investors favored risk aversion. The prospect of a prolonged economic recession scared investors out of higher yielding currencies and muted any existing inflationary fears after last week’s encouraging global news. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. As the CFTC hearings rage on, the broader commodity market may continue to suffer. Just as Gold did not see as substantial gains as Silver last week, it will likely withstand substantial losses as well.

Silver                 $13.295                          -$0.445                          -3.24%
Monday’s $14-per-ounce level for Silver future prices is certainly a thing of the past; continuing from yesterday’s decline, Silver slumped an additional 3.5% today. The US Durable Goods Orders report weighed on Silver future prices, as the prospect of a prolonged economic recession is becoming increasingly probably and may be confirmed by Friday’s US GDP report. Depressing fundamental data is taking control over future price speculation, especially amid the CFTC hearings as traders maintain a “wait and see” approach. Tomorrow’s German unemployment rate and Japan’s CPI report should be the main market movers for Silver, as investors will have new insight into the health of the global economy.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

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Daily Commodities Fundamentals: Broader Commodity Market Retreats Amid CFTC Speculation and Falling Risk Appetite

North American Commodity Update, Last Updated 7/28/2009 4:00 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Fall As CFTC Hearings Begin

Crude Oil (WTI)   $67.230                         -$1.080                             -1.58%
Crude Oil future prices dropped significantly today, falling nearly 2.5% during intraday before paring some of its losses. Crude prices started off the day slightly higher only to begin a steady descent following the US Consumer Confidence report, which revealed worse-than-expected results (46.6 actual vs. 49.0 expected). Continued unemployment increases seem to be the primary reason for the disappointing confidence figure; just last week, Fed Chairman Bernanke said that the unemployment rate could increase for a few more years. European equity indices fell lower today, while the US indices appear to be following suit. Poor earnings from both Office Depot and US Steel Corporation discouraged investors even after the S&P Case Shiller Index improved for the first month in three years. However, while all of the above was market moving, the most influential price driver in the broader commodity market today was the beginning of the CFTC hearings regarding speculation restriction. Commodities fell across the board as investors fear that CFTC Chairman will attempt to impose strict position limits in energy markets. The results of the hearings will likely weigh heavily on Crude future prices.

Upcoming Department of Energy Inventories

Commodities – Metals

Precious Metals Decline Near 2% on CFTCSpeculation and Dollar Strength

Gold                   $939.600                           -$16.700                           -1.75%
Gold future prices retreated back below the psychological $950-per-ounce level today as part of a broad commodity pullback today. Investors are selling out of Gold and taking a “wait and see” approach as the CFTC hearings push forward. The results of the CFTC meetings this week will likely be the main driver behind Gold future prices in addition to risk appetite/aversion. The US dollar outperformed the Euro, Pound, and Franc today, but lost to the ultra-safe Japanese Yen and impressive Australian dollar. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. Tomorrow’s German CPI report will likely be a market mover for Gold future prices.

Silver                 $13.725                    -$0.265                          -1.89%
After breaking above the $14-per-ounce level yesterday, Silver followed the other commodities downward today, losing approximately 2% during intraday trading. Like Gold, tomorrow’s CPI report will move Silver future prices; however, the US Durable Goods Orders figure will serve as a leading indicator for future industrial production. Because durable goods are expected to last more than three years, an increase in orders will signal heightened optimism in the marketplace and potential growth. Tomorrow should be an interesting day for Silver, as the fundamental data reports will be measured against any news emerging from the CFTC hearings.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

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Daily Commodities Fundamentals: Crude and Silver Finish Strong; Gold Breaks Even

North American Commodity Update, Last Updated 7/17/2009 4:15 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Futures Cap Off An Impressive Week

Crude Oil (WTI)   $63.420                         +$1.400                             +2.26%
Crude future prices finished the week strong today, rebounding from last week’s heavy losses. After hitting 3% gains during intraday trading, Crude has stalled out around $63.50-per-barrel, a 2.5% increase. Today’s US Housing Starts report was the likely driver of Crude, as the report indicated a greater-than-expected number of new houses built in the United States. The US Building Permits figure was also larger-than-expected .Newfound optimism in the global marketplace was this week’s theme, as investors are becoming slowly convinced that the worst of the recession has passed. Demand for Crude has been exceptionally week this summer, but the Department of Inventories latest figures were encouraging. Investors will pay close attention as corporate earnings season continues, looking for any signal that the recession is finally coming to a close. In the meantime, expect Crude prices to push forward, potentially testing the psychological $65-per-barrel mark sometime next week.

Upcoming Department of Energy Inventories

Commodities – Metals

Gold Trades Sideways, Silver Holds on to Minor Gains

Gold                   $936.000                           +$0.600                           +0.06%
Gold traded mostly sideways during today’s session on conflicting fundamental data. The US dollar, which has recently been a good contrarian indicator for Gold future price direction, was up against all majors. Though not necessarily permanent, investors ended the week favoring risk aversion. Encouraging corporate earnings releases next week could weaken the dollar as investors favor higher yielding (riskier) assets. Usually a stronger dollar leads to a decline in Gold prices, but this was not the case today. The prospect of a global economic recovery has sparked inflationary fear, propping up Gold prices despite the greenback’s strength. Australian and German PPI reports come out early Monday; any indication of inflation will drive Gold. Also, if corporate earnings continue to impress, Gold could re-test the $950-per-ounce level this month.

Silver                 $13.365                    +$0.130                          +0.98%
After falling to recent lows just last week, Silver is looking to close today’s trading with a noticeable recovery. As is usually the case with Silver, economic optimism leads to significant gains in future prices. Like Gold, inflationary fear resulting from this week’s CPI reports has helped Silver move higher, back above the $13-per-ounce level. Impressive fundamental data (corporate earnings, unemployment figures, industrial production reports) also pushed Silver higher despite the dollar’s strength today. Continued upward movement in Silver future prices would not be surprising, especially if the good news continues to flow in.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

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Daily Commodities Fundamentals: Commodities Trade Lower On Dissapointing Economic Releases

Commodities – Energy

Crude Prices Fall As Data Suggests Continued Global Contraction
Crude prices declined for the day as economic releases from the US and Europe pointed to further economic contraction. US Consumer confidence fell to 49.3, significantly lower than the expected 55.3, underscoring the difficult condition of the labor market. Spending will remain weak as consumers worry about job prospects. In turn this will weigh in on overall economic activity and reduce crude demand.  With crude supplies remaining at very high levels, this should provide significant downward pressures on prices. On the other hand, most of these selling pressures will be offset by dollar weakness as crude is a dollar-denominated asset. Since US government deficits remain at record levels and will likely remain so for some time, the US dollar will likely remain at lower parity to its major pairs for some time. So long as this continues, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Crude Oil (WTI)   $70.070                              -$1.400                             -1.99%

Commodities – Metals

Safe-haven Metals Decline As Dollar Gains, Fundamentals Still Point To Gains?

Gold                   $927.450                           -$13.200                           -1.40%
Gold prices finished the session modestly lower as the US dollar gained against its majors. Fundamentals indeed stand in favor of further gains for the near to medium term but the metal will likely remain rangebound until a more solid view of economic direction is established. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. The US dollar will also remain subdued against its major counter-parts for some time and boost prices. Expect gains for the near to medium term.

Silver                 $13.5800                   -$0.3950                           -2.83%
Silver futures were declined for the day on the negative economic data. Prices will rise if safe-haven metals gain, but due to its industrial applications, economic weakness will mute gains somewhat. On the other hand, if signs of recovery are released, silver will gain at a much faster rate than gold for the same reason. Expect modest gains for the near-term.

-Written by Stefan Tifigiu and Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com, Jsteinberg@fxcm.com

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Daily Commodities Fundamentals: Crude Continues To Range, Safe-Havens May Be Poised For Further Gains

Commodities – Energy

Crude Prices Fall Despite Large Stockpile Decline And Positive Durable Goods Data

Crude Oil (WTI)   $69.340                              -$0.890                             -1.27%
Crude prices remain fell for the session as savings gains hint that consumer spending will ikely diminish in the coming months. Fundamental influences exist that can both support and deflate current prices. Stockpiles will remain high as lower crude demand couples with continued production from OPEC countries. However, the prospect of lower spending will come as a double edged sword since on the one hand, lower demand should keep prices lower, while on the other lower spending will likely lead to further economic weakness and force the government to maintain deficits at record levels for some time. This will continue to weigh in on dollar pricing and effectively buoy prices somewhat for the medium term. Add to this political tensions that will disrupt (albeit minimally) supply from various countries and you will continue to have support for higher crude prices. While supply disruptions would have a minimal impact on the already large crude stockpiles, the disruptions will still have an effect on prices. In turn, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Commodities – Metals

Safe-haven Metals Gain Despite Dollar Gains, Sign Of Turnaround In Sentiment?

Gold                   $940.200                           +$0.700                           +0.07%
Gold prices finished the session modestly higher despite dollar declines. The lack of movement may come as Gold prices approach resistance levels that have been hit over four times in the past month and have only been broken through once.  Fundamentals indeed stand in favor of further continued gains for the near to medium term. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. The US dollar will also remain subdued against its major counter-parts for some time and boost prices. Expect gains for the near to medium term.

Silver                 $14.1050                         +$0.0730                          +0.52%
Silver futures were flat for the day despite the positive data. Prices will rise if safe-haven metals gain, but due to its industrial applications, economic weakness will mute gains somewhat. On the other hand, if further signs recovery are released, silver will gain at a much faster rate than gold for the same reason. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

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Daily Commodities Fundamentals: Crude Prices Slip Despite Data In Favor Of Gains, Metals May Be Poised For Further Gains

Commodities – Energy

Crude Prices Fall Despite Large Stockpile Decline And Positive Durable Goods Data

Crude Oil (WTI)   $68.540                              -$0.700                             -1.01%
Crude prices remain inversely correlated to dollar gains with crude declining despite a sharp drop in stockpiles and positive Durable Goods data. Nevertheless while data was in favor of higher prices, numerous fundamental reasons continue to point to lower crude prices. Downward pressure comes from stockpiles near decade highs, lower crude demand, and maintained production levels by OPEC. On the other hand, dollar weakness, a resurgence in growth in some parts of the world, and political turmoil in major oil producer countries will provide some steam to buoy prices. Dollar declines are the largest provider of support to prices at current levels. While the dollar has continues to osscilate between losses and gains, the overall trend will likely remain at lower levels for some time. This comes as the effect of record government deficits will weigh in on the dollar. Given weakness in the economy, debts will be difficult to unwind without damaging a recovery. Meanwhile mounting violence and protests in countries like Iran threaten to disrupt supply chains. While these disruptions would more than likely be offset by the large amount of stockpiles on hand, turmoil will still likely be priced in and excacerbated by dollar declines. In turn, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Commodities – Metals

Safe-haven Metals Gain Despite Dollar Gains, Sign Of Turnaround In Sentiment?

Gold                   $932.100                           +$7.800                           +0.85%
Gold prices gained modestly for the session despite dollar gains. This could be a sign of that steady losses in past sessions may have subsided.  Fundamentals indeed stand in favor of further gains for the near to medium term. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. Meanwhile record deficits juggled during a continued recession will likely keep the US dollar subdued against its counter-parts for some time and provide for higher prices. Expect gains for the near to medium term.

Silver                 $13.8950                   +$0.0190                          +0.14%
Silver futures were flat for the day despite the positive data. Price gains will likely slow if expectations for further economic contraction comes to fruition, but the lack of movement in prices today may be a sign that markets are unconvinced of the possibilities of a near-term recovery. Nevertheless, the metal has rallied considerably since the start of 2009 largely on expectations for such a recovery. If delayed, the metal could lose some of those gains. All the same, if safe-havens gain, this will still boost prices albeit more moderately. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

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Commodities Daily Fundamentals: Commmodities Rebound On Dollar Weakness

Commodities – Energy

Crude Prices Fall As Expectations For Lower Demand Weighs On Prices

Crude Oil (WTI)        $69.210                              +$1.710                           +2.53%
Crude prices rebounded as the dollar sold off sharply for the day, While there are numerous fundamental reasons for crude prices to continue to decline, countervailing factors that will offset such these pressures. Downward pressure will come from stockpiles near decade highs, lower crude demand, and OPEC countries. On the other hand, dollar weakness, a resurgence in growth in some parts of the world, and political turmoil in major oil producer countries will push up prices. Dollar declines are the largest provider of support for prices at current levels. While the dollar has rebounded a few times in past few sessions, it will likely remain at lower parity to its counterparts for some time. Record government deficits that many point to as primary reason for the selloffs will be very difficult to unwind without adverse effects on an already weakened economy. Meanwhile mounting violence and protests in countries like Iran threaten to disrupt supply chains. While these disruptions would more than likely be offset by the large amount of stockpiles on hand, turmoil will still push crude prices slightly higher. In turn, the push and pull between these factors will likely drive crude prices to range between major resistance levels of $65 and $73 a barrel for the near-term.

Commodities – Metals

Safe-haven Metals Continue Declines On Dollar Strength, Muted Inflation

Gold                   $926.800                           +$5.800                           +0.63%
Gold prices gained modestly for the session as the US dollar fell against its majors. While gold prices have fallen substantially for the past few weeks, fundamentals continue to point to gains. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. Meanwhile record deficits juggled during a continued recession will likely keep the US dollar subdued against its counter-parts for some time. Both of these factors stand in favor of higher gold prices. Expect gains for the near to medium term.

Silver                 $13.8800                          +$0.1270                          +0.92%
Silver prices followed suit with gold. Prices gains will likely slow if expectations for further economic contraction comes to fruition. The metal has rallied considerably since the start of 2009 largely on expectations for a recovery and if that recovery is delayed the metal could lose some of those gains. Nevertheless, safe-haven gains will still boost prices somewhat. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

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Commodities Daily Fundamentals: Crude Gains, Safe-Havens Stall On Dollar Rebound

Commodities – Energy

Crude Continues Gains Following News Taken To As Further Sign Of Recovery

Crude Oil (WTI)   $71.260                               +$0.240                                +0.32%
Crude prices gained for the day as markets reacted positively to better than expected economic releases. Continuing Claims, Leading Indicators and the Philadelphia fed all showed better than expected returns. However, upon closer inspection, these releases provide little to justify any major gains in crude prices. Continuing Claims does not account for those who have run out of unemployment benefits and while manufacturing showed a much better result than anticipated, it still points to further contraction. There are a few factors that support higher crude prices however. Among them, the US dollar is likely to remain weaker to other currencies for some time as deficits are beginning to weigh in on the dollar’s appeal as a safe-haven vehicle. In turn, the conditions for extended dollar weakness will likely continue on for some time and as such support crude prices at higher levels. Some also point to political turmoil as a reason for higher prices. Supply shocks from such events could ,but it is doubtful that such disruptions will be large enough to cause spikes in prices. This is because global economic activity will remain subdued and drive crude demand to hang about at very low levels. Supplies remain elevated and with crude production rates being maintained by major suppliers, this should keep stockpiles  high. Supply shocks will have little effect since crude demand will likely remain low since most major economies remain in contraction. In turn, these conflicting factors will likely lead crude prices to range between major resistance levels of $65 and $75 for the medium term.

Commodities – Metals

Safe-haven Metals Decline As Dollar Continues Gains

Gold                   $934.300                           -$1.5000                              -0.16%
Gold prices declined toward the middle of the US session as the US dollar swung sharply from previous declines. Dollar weakness and expectation for greater inflation will likely continue however and stand in favor of gold strength. At the moment, the dollar continues to show indecision in momentum and such oscilations could again lead to safe-haven outflows from the dollar. Gold prices will benefit from this in the near-term, but will also gain on expected inflationary risks. Although presently muted, capital injections are large enough to make inflation a substantial risk once a recovery takes full swing. A number of longer-term investors positioning to hedge against this will likely use gold to do so. As a result, prices can be expected to rise for the medium-term.

Silver                 $14.2200                   -$0.1300                               -0.98%
Silver prices gained as equity markets continued to decline. Gains will likely continue going forward but will be offset if the economy continues to show signs of contraction as silver is used in many industrial applications. However, if expectations turn such that economic activity will improve, silver has the potential to gain at a much faster pace than gold due to both effects of its safe-haven status and its industrial application. Expect modest gains for the near to medium-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

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Commodities Daily Technicals: Crude Pulls Back From Top Of Multi-Month Trend Channel

Short-term Technical Outlook For Crude Oil

Short-term Technical Outlook For Gold

Short-term Technical Outlook For Silver

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Commodities Daily Fundamentals: Commodities Gain Modestly On Dollar Reversal

Commodities – Energy

Crude Rebounds As Dollar Reverses Gains Toward End of Session

Crude Oil (WTI)   $70.960                          +$0.490                                +0.70%
Crude prices swung to modest gains toward the end of the session as dollar gains reversed. Pressured by a number of factors, the US dollar is likely to remain at lower parity to other currencies for some time. This comes as deficits remain at record levels and will likely stay that way without drastic efforts to reverse them. However the chances of such actions to come to fruition are very low since the economy remains in a recession. In turn, the conditions for extended dollar weakness will likely continue on for some time and fashion support for crude prices. On the other hand, global economic activity will remain subdued and by extension so too will crude demand. Stockpiles remain high and ongoing crude production from major suppliers like OPEC will continue to keep them at elevated levels. Meanwhile crude demand will likely stay weak as well since the global economy remains in contraction. Fundamental forces like these should provide some countering pressure for crude prices. In turn, crude prices will likely range between major resistance levels at $65 and $75 for the medium term.

Commodities – Metals

Safe-haven Metals Gain On Dollar Weakness

Gold                   $940.000                           +$8.0000                              +0.93%
Gold prices continued to post modest gains for the day. Dollar weakness and expectation for greater inflation will likely continue to stand in favor of gold strength for some time. At the moment, the dollar continues to show indecision in movement and such gyrations could again lead to withdrawl from the dollar as a safe-haven. While gold will benefit from this in the near-term, it will also gain on expected inflationary risks for longer-term investors. And though presently muted, capital injections are large enough to make inflation a substantial risk for the future and is likely being hedged against by some longer-term investors. As a result, Gold prices can be expected to gain for the medium-term.

Silver                 $14.3400                         +$0.2100                               +1.45%
Silver prices gained as equity markets continued to decline. Gains will likely continue going forward but will be offset if the economy continues to show signs of contraction as silver is used in many industrial applications. However, if expectations turn such that economic activity will improve, silver has the potential to gain at a much faster pace than gold due to both effects of its safe-haven status and its industrial application. Expect modest gains for the near to medium-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

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