Brent crude fell to the lowest level in almost four years after the International Energy Agency said oil demand will expand this year at the slowest pace since 2009. West Texas Intermediate slipped for the fifth time in six days.
Futures dropped as much as 3.3 percent in London and New York. Oil consumption will rise by about 650,000 barrels a day this year, 250,000 fewer than the prior estimate, the Paris-based agency said in its monthly market report. U.S. crude supplies probably grew by 2.5 million barrels last week, according to a Bloomberg survey of analysts before a report from the Energy Information Administration on Oct. 16.
Oil futures have collapsed into bear markets as shale supplies boost U.S. output to the most in almost 30 years and global demand weakens. The biggest producers in the Organization of Petroleum Exporting Countries are responding by cutting prices, sparking speculation that they will compete for market share rather than trim output. Saudi Arabia won’t alter its supplies much between now and the end of the year, a person familiar with its oil policy said on Oct. 3.
“The IEA report is killing Brent,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “This is the fourth month in a row where they’ve cut their demand forecast. There’s tremendous downside risk for the market.”
Fourth Month
Brent for November settlement declined $2.87, or 3.2 percent, to $86.02 a barrel on the London-based ICE Futures Europe exchange at 1:54 p.m. in New York. It slipped to $85.92, the lowest intraday price since Dec. 1, 2010. The volume of all futures traded was 52 percent above the 100-day average for the time of day. Prices have decreased 22 percent this year.
WTI for November delivery dropped $2.75, or 3.2 percent, to $82.99 a barrel on the New York Mercantile Exchange. The contract reached $82.92 today, the lowest price since July 2, 2012. Volume was 75 percent higher than the 100-day average. The U.S. benchmark grade traded at a $3.05 discount to Brent, down from $3.15 at yesterday’s close.
The IEA reduced its estimate for demand growth this year for the fourth month in a row, meaning oil consumption will expand by about half the rate of 1.3 million barrels a day anticipated in June. The IEA cut its 2015 demand growth forecast by 100,000 barrels a day to 1.1 million. About 200,000 barrels a day less crude will be needed from OPEC this year and next than estimated previously, the agency said.
Market Share
OPEC, which supplies about 40 percent of the world’s crude, is raising output as its members compete for market share while seeking to meet increased domestic demand. The group pumped 30.935 million barrels a day in September, the most since August 2013, according to a Bloomberg survey. The gain was led by Libya, where output climbed by 280,000 barrels a day to 780,000, the fifth straight increase.
“The recovery in Libyan oil production has pushed up total OPEC output at a time when demand growth is slowing,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “OPEC has a serious problem.”
Iraq said on Oct. 12 that it will sell its Basrah Light crude to Asia at the biggest discount since January 2009, following cuts by Saudi Arabia and Iran. Middle East producers almost always follow the lead of Saudi Arabia, OPEC’s largest member when setting export prices. The Saudis need to deepen price cuts for Asia by between 70 cents and $1 a barrel to restore a competitive position against other Middle Eastern and West African suppliers, according to JPMorgan Chase & Co.
Divergent Views
Oil ministers from Kuwait and Algeria have dismissed possible output cuts as the price slump prompted Venezuela to call for an emergency OPEC meeting. The group is scheduled to gather on Nov. 27 in Vienna.
Data in Europe today showed consumer prices in Sweden and Spain fell, U.K. inflation slowed to a five-year low and German investor confidence decreased for a 10th month.
The EIA, the Energy Department’s statistical arm, will release its weekly petroleum inventory report on Oct. 16 at 11 a.m. in Washington, a day later than usual because of yesterday’s Columbus Day holiday. Crude supplies rose 5.02 million barrels to 361.7 million in the week ended Oct. 3, the biggest increase since April, EIA data showed. “The market isn’t expected to get any relief from Thursday’s inventory numbers,” Yawger said. “We’re looking for it to show a substantial build in crude supplies, coming on top of a 5 million-barrel build the previous week. There’s plenty of crude on hand.”
Gasoline Stockpiles
The report will probably show that gasoline stockpiles dropped by 1.3 million barrels in the week ended Oct. 10, according to the median estimate in the Bloomberg survey of nine analysts. Inventories of distillate fuel, a category that includes diesel and heating oil, are projected to have slipped by 1.5 million barrels.
November gasoline futures slid 3.99 cents, or 1.8 percent, to $2.2154 a gallon on the Nymex. They touched $2.1967, the lowest intraday level since Dec. 1, 2010. Pump prices fell 1.3 cents to $3.186 a gallon nationwide yesterday, the least since Nov. 12, according to AAA, the largest U.S. motoring group.
Ultra low sulfur diesel for November delivery declined 5.64 cents, or 2.2 percent, to $2.5044 a gallon. Futures touched $2.4974, the lowest intraday level since Jan. 10, 2011. “Lower fuel prices are beneficial for consumers,” Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant, said by phone. “The drop in prices, though, is a symptom of concern about the global economy. The consumer benefit will not ameliorate the economic slowdown.”
Soybeans Rise to Three-Week High on U.S. Harvest Delays
Soybean futures rose to a three-week high on concern that rain will delay the harvest in the U.S., the world’s largest producer. Corn prices climbed, while wheat fell.
Rain in some areas of the Midwest will disrupt soybean and corn collection with some severe weather “unfavorable for the mature crops” before drier weather returns by the end of the week, DTN meteorologist Joel Burgio said in a report. As of Oct. 5, 20 percent the oilseed crop was harvested, trailing the average in the previous five years, according to the U.S. Department of Agriculture. The agency will issue an update at 4 p.m. in Washington. “We could see these grain markets move higher on a little bit of a weather scare,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “We’ve got to get the crop out of the ground.”
Soybean futures for November delivery climbed 0.5 percent to $9.50 a bushel at 10:25 a.m. on the Chicago Board of Trade. Earlier, the price reached $9.705, the highest for a most-active contract since Sept. 19. Trading was more than triple the 100-day average for this time, data compiled by Bloomberg show. This year’s slump may spur increased demand for the oilseed used in animal feed and cooking oil, Cholly said.
Through yesterday, the price dropped 27 percent in 2014, touching a four-year low of $9.04 on Oct. 1. U.S. output this year is forecast by the USDA to rise 17 percent to a record 3.927 billion bushels from 2013.
Corn futures for December delivery rose 0.6 percent to $3.48 a bushel. Yesterday, the price jumped 3.6 percent, the most since January. Wheat futures for December delivery declined 0.7 percent to $5.0175 a bushel.
Gold Futures Rise to Four-Week Hihg on Demand for Haven
Gold futures rose to the highest in almost four weeks as concern that economic growth is slowing spurred demand for a haven asset.
The metal advanced this month as Federal Reserve officials indicated a worldwide economic slowdown may delay U.S. interest-rate increases. Germany cut its growth outlook today and investor confidence fell to the weakest level in two years as recession concerns mount. Holdings in bullion-backed exchange-traded products rose yesterday by the most since July. The assets are rebounding after reaching a five-year low on Oct. 10. Prices climbed 2.4 percent last week, snapping five straight losses, as bets that record-low borrowing costs will persist fueled investor demand.
“The falling gold price might be a signal that global economic growth is slowing,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in a telephone interview. “In such a scenario, you may be looking for gold as a safe haven.”
Gold futures for December delivery added 0.2 percent to $1,232.70 an ounce at 11:37 a.m. on the Comex in New York, after touching $1,238.60, the highest since Sept. 17. Holdings in global ETPs rose by 3.7 metric tons yesterday to 1,666 tons, the first increase in two weeks, data compiled by Bloomberg show.
Gold dropped 5.9 percent last month as signs of an improving U.S. job market spurred speculation the Fed was moving closer to increasing borrowing costs. Minutes from the central bank’s September meeting released last week highlighted growing concern that the strengthening dollar could hurt exports. The policy makers maintained a pledge to keep interest rates low for a “considerable time.”
Gold’s Allure
Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value. The metal climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent, boosting inflation concerns.
Silver futures for delivery in December rose 0.1 percent to $17.36 an ounce on the Comex, gaining for the second straight day.
On the New York Mercantile Exchange, palladium futures for December delivery added 0.8 percent to $792.15 an ounce. Platinum futures for January delivery climbed 0.6 percent to $1,269.30 an ounce.
Copper Advances to Three-Week High on China-Demand Bets
Copper futures rose to a three-week high after China’s central bank cut an interest rate for the second time in a month, fueling speculation that lower borrowing costs will spur economic growth and demand. The bank sold 14-day repurchase agreements at 3.4 percent today, compared with 3.5 percent on Oct. 9. Copper has dropped 9 percent this year on signs of a slowdown in China, which according to Standard Chartered Plc accounts for 45 percent of world demand. The nation’s growth last quarter probably eased to a five-year low of 7.2 percent, a Bloomberg survey of economists showed before data due Oct. 21.
“The interest rate change provides a little bit of comfort around China, where we haven’t seen positive news,” Vicky Sanders, head of analytics sales at Marex Spectron Group in London, said in a telephone interview.
Copper futures for December delivery added 1.6 percent to settle at $3.09 a pound at 1:12 p.m. on the Comex in New York after reaching $3.1045, the highest since Sept. 19.Prices rose yesterday after China reported an increase in exports, boosting the global demand outlook for the metal.
On the London Metal Exchange, copper for delivery in three months increased 1.3 percent to $6,800 a metric ton ($3.08 a pound).Orders to remove the metal from warehouses monitored by the bourse climbed 33 percent, the most since May 2013, to 26,300 tons on an increase in New Orleans, the biggest LME copper repository.
Nickel, lead, and tin fell in London, while zinc and aluminum rose.
source: Bloomberg
Futures dropped as much as 3.3 percent in London and New York. Oil consumption will rise by about 650,000 barrels a day this year, 250,000 fewer than the prior estimate, the Paris-based agency said in its monthly market report. U.S. crude supplies probably grew by 2.5 million barrels last week, according to a Bloomberg survey of analysts before a report from the Energy Information Administration on Oct. 16.
Oil futures have collapsed into bear markets as shale supplies boost U.S. output to the most in almost 30 years and global demand weakens. The biggest producers in the Organization of Petroleum Exporting Countries are responding by cutting prices, sparking speculation that they will compete for market share rather than trim output. Saudi Arabia won’t alter its supplies much between now and the end of the year, a person familiar with its oil policy said on Oct. 3.
“The IEA report is killing Brent,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “This is the fourth month in a row where they’ve cut their demand forecast. There’s tremendous downside risk for the market.”
Fourth Month
Brent for November settlement declined $2.87, or 3.2 percent, to $86.02 a barrel on the London-based ICE Futures Europe exchange at 1:54 p.m. in New York. It slipped to $85.92, the lowest intraday price since Dec. 1, 2010. The volume of all futures traded was 52 percent above the 100-day average for the time of day. Prices have decreased 22 percent this year.
WTI for November delivery dropped $2.75, or 3.2 percent, to $82.99 a barrel on the New York Mercantile Exchange. The contract reached $82.92 today, the lowest price since July 2, 2012. Volume was 75 percent higher than the 100-day average. The U.S. benchmark grade traded at a $3.05 discount to Brent, down from $3.15 at yesterday’s close.
The IEA reduced its estimate for demand growth this year for the fourth month in a row, meaning oil consumption will expand by about half the rate of 1.3 million barrels a day anticipated in June. The IEA cut its 2015 demand growth forecast by 100,000 barrels a day to 1.1 million. About 200,000 barrels a day less crude will be needed from OPEC this year and next than estimated previously, the agency said.
Market Share
OPEC, which supplies about 40 percent of the world’s crude, is raising output as its members compete for market share while seeking to meet increased domestic demand. The group pumped 30.935 million barrels a day in September, the most since August 2013, according to a Bloomberg survey. The gain was led by Libya, where output climbed by 280,000 barrels a day to 780,000, the fifth straight increase.
“The recovery in Libyan oil production has pushed up total OPEC output at a time when demand growth is slowing,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “OPEC has a serious problem.”
Iraq said on Oct. 12 that it will sell its Basrah Light crude to Asia at the biggest discount since January 2009, following cuts by Saudi Arabia and Iran. Middle East producers almost always follow the lead of Saudi Arabia, OPEC’s largest member when setting export prices. The Saudis need to deepen price cuts for Asia by between 70 cents and $1 a barrel to restore a competitive position against other Middle Eastern and West African suppliers, according to JPMorgan Chase & Co.
Divergent Views
Oil ministers from Kuwait and Algeria have dismissed possible output cuts as the price slump prompted Venezuela to call for an emergency OPEC meeting. The group is scheduled to gather on Nov. 27 in Vienna.
Data in Europe today showed consumer prices in Sweden and Spain fell, U.K. inflation slowed to a five-year low and German investor confidence decreased for a 10th month.
The EIA, the Energy Department’s statistical arm, will release its weekly petroleum inventory report on Oct. 16 at 11 a.m. in Washington, a day later than usual because of yesterday’s Columbus Day holiday. Crude supplies rose 5.02 million barrels to 361.7 million in the week ended Oct. 3, the biggest increase since April, EIA data showed. “The market isn’t expected to get any relief from Thursday’s inventory numbers,” Yawger said. “We’re looking for it to show a substantial build in crude supplies, coming on top of a 5 million-barrel build the previous week. There’s plenty of crude on hand.”
Gasoline Stockpiles
The report will probably show that gasoline stockpiles dropped by 1.3 million barrels in the week ended Oct. 10, according to the median estimate in the Bloomberg survey of nine analysts. Inventories of distillate fuel, a category that includes diesel and heating oil, are projected to have slipped by 1.5 million barrels.
November gasoline futures slid 3.99 cents, or 1.8 percent, to $2.2154 a gallon on the Nymex. They touched $2.1967, the lowest intraday level since Dec. 1, 2010. Pump prices fell 1.3 cents to $3.186 a gallon nationwide yesterday, the least since Nov. 12, according to AAA, the largest U.S. motoring group.
Ultra low sulfur diesel for November delivery declined 5.64 cents, or 2.2 percent, to $2.5044 a gallon. Futures touched $2.4974, the lowest intraday level since Jan. 10, 2011. “Lower fuel prices are beneficial for consumers,” Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant, said by phone. “The drop in prices, though, is a symptom of concern about the global economy. The consumer benefit will not ameliorate the economic slowdown.”
Soybeans Rise to Three-Week High on U.S. Harvest Delays
Soybean futures rose to a three-week high on concern that rain will delay the harvest in the U.S., the world’s largest producer. Corn prices climbed, while wheat fell.
Rain in some areas of the Midwest will disrupt soybean and corn collection with some severe weather “unfavorable for the mature crops” before drier weather returns by the end of the week, DTN meteorologist Joel Burgio said in a report. As of Oct. 5, 20 percent the oilseed crop was harvested, trailing the average in the previous five years, according to the U.S. Department of Agriculture. The agency will issue an update at 4 p.m. in Washington. “We could see these grain markets move higher on a little bit of a weather scare,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “We’ve got to get the crop out of the ground.”
Soybean futures for November delivery climbed 0.5 percent to $9.50 a bushel at 10:25 a.m. on the Chicago Board of Trade. Earlier, the price reached $9.705, the highest for a most-active contract since Sept. 19. Trading was more than triple the 100-day average for this time, data compiled by Bloomberg show. This year’s slump may spur increased demand for the oilseed used in animal feed and cooking oil, Cholly said.
Through yesterday, the price dropped 27 percent in 2014, touching a four-year low of $9.04 on Oct. 1. U.S. output this year is forecast by the USDA to rise 17 percent to a record 3.927 billion bushels from 2013.
Corn futures for December delivery rose 0.6 percent to $3.48 a bushel. Yesterday, the price jumped 3.6 percent, the most since January. Wheat futures for December delivery declined 0.7 percent to $5.0175 a bushel.
Gold Futures Rise to Four-Week Hihg on Demand for Haven
Gold futures rose to the highest in almost four weeks as concern that economic growth is slowing spurred demand for a haven asset.
The metal advanced this month as Federal Reserve officials indicated a worldwide economic slowdown may delay U.S. interest-rate increases. Germany cut its growth outlook today and investor confidence fell to the weakest level in two years as recession concerns mount. Holdings in bullion-backed exchange-traded products rose yesterday by the most since July. The assets are rebounding after reaching a five-year low on Oct. 10. Prices climbed 2.4 percent last week, snapping five straight losses, as bets that record-low borrowing costs will persist fueled investor demand.
“The falling gold price might be a signal that global economic growth is slowing,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in a telephone interview. “In such a scenario, you may be looking for gold as a safe haven.”
Gold futures for December delivery added 0.2 percent to $1,232.70 an ounce at 11:37 a.m. on the Comex in New York, after touching $1,238.60, the highest since Sept. 17. Holdings in global ETPs rose by 3.7 metric tons yesterday to 1,666 tons, the first increase in two weeks, data compiled by Bloomberg show.
Gold dropped 5.9 percent last month as signs of an improving U.S. job market spurred speculation the Fed was moving closer to increasing borrowing costs. Minutes from the central bank’s September meeting released last week highlighted growing concern that the strengthening dollar could hurt exports. The policy makers maintained a pledge to keep interest rates low for a “considerable time.”
Gold’s Allure
Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value. The metal climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent, boosting inflation concerns.
Silver futures for delivery in December rose 0.1 percent to $17.36 an ounce on the Comex, gaining for the second straight day.
On the New York Mercantile Exchange, palladium futures for December delivery added 0.8 percent to $792.15 an ounce. Platinum futures for January delivery climbed 0.6 percent to $1,269.30 an ounce.
Copper Advances to Three-Week High on China-Demand Bets
Copper futures rose to a three-week high after China’s central bank cut an interest rate for the second time in a month, fueling speculation that lower borrowing costs will spur economic growth and demand. The bank sold 14-day repurchase agreements at 3.4 percent today, compared with 3.5 percent on Oct. 9. Copper has dropped 9 percent this year on signs of a slowdown in China, which according to Standard Chartered Plc accounts for 45 percent of world demand. The nation’s growth last quarter probably eased to a five-year low of 7.2 percent, a Bloomberg survey of economists showed before data due Oct. 21.
“The interest rate change provides a little bit of comfort around China, where we haven’t seen positive news,” Vicky Sanders, head of analytics sales at Marex Spectron Group in London, said in a telephone interview.
Copper futures for December delivery added 1.6 percent to settle at $3.09 a pound at 1:12 p.m. on the Comex in New York after reaching $3.1045, the highest since Sept. 19.Prices rose yesterday after China reported an increase in exports, boosting the global demand outlook for the metal.
On the London Metal Exchange, copper for delivery in three months increased 1.3 percent to $6,800 a metric ton ($3.08 a pound).Orders to remove the metal from warehouses monitored by the bourse climbed 33 percent, the most since May 2013, to 26,300 tons on an increase in New Orleans, the biggest LME copper repository.
Nickel, lead, and tin fell in London, while zinc and aluminum rose.
source: Bloomberg