Commodities dropped to a five-year low as copper and zinc slumped amid concern that demand is slowing in China, the world’s biggest consumer. The Bloomberg Commodity Index (BCOM) of 22 raw materials fell 0.8 percent by 3:57 p.m. in London after slumping to the lowest since July 2009. Copper declined for the first time in three days while zinc slid as much as 3.1 percent in London. Nickel also dropped.
Commodities fell 6.5 percent this year, headed for the fourth annual decline and the longest slump on that basis since at least 1991, amid concern that economic growth is weakening as global equity markets lost $1.5 trillion last week. U.S. retail sales dropped more than forecast in September, data from the Commerce Department showed today.
“It is clear the positive momentum seen in this sector over the last 12 months has faded,” Jim Lennon, senior commodities consultant at Macquarie Group Ltd., said in a report e-mailed today. “Output from the world’s factories, mines and power stations shrank in August, a poor backdrop for commodities demand.” Copper fell from a three-week high in London, declining as much as 2.2 percent to $6,652 a metric ton, as China reported the slowest consumer inflation in more than four years, indicating that demand for the metal is weakening. The metal dropped 9.5 percent this year.
The metal for delivery in December slid 2.4 percent to $3.0155 a pound at 11 a.m. on the Comex in New York. Prices touched the highest level since Sept. 19 yesterday.
Oil is languishing in a bear market, with the International Energy Agency predicting the lowest demand growth since 2009. Brent crude dropped to as low as $83.37 a barrel in London, the lowest level in almost four years, before trading little changed. The West Texas Intermediate grade slipped to $80.01 in New York trading, the lowest since June 2012. The Organization of Petroleum Exporting Countries boosted output in September to the highest in 13 months, according to Bloomberg estimates.
“Oil prices are struggling to find a floor, as the market contemplates the possibility that OPEC may be happy to let prices fall,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail. Corn for December delivery fell 1.3 percent to $3.525 a bushel on the Chicago Board of Trade. U.S. farmers are set to collect a record 14.475 billion bushels of corn this year, the U.S. Department of Agriculture forecast on Oct. 10. Wheat also declined.
WTI Oil Near Two-Year Low on Glut; Brent Little Changed
West Texas Intermediate crude traded near the lowest level in more than two years as rising U.S. production increased supplies. Brent was little changed.
Both grades have collapsed into a bear market as shale supplies boost U.S. output to the most in almost 30 years and global demand growth weakens. The largest OPEC producers are responding by cutting prices, sparking speculation that they will compete for market share rather than reduce supply.
“The supply boom is ongoing,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Nobody sees any reason to buy so people just keep selling off. The Saudis will have to cut production to stabilize the price.” WTI for November delivery fell 4 cents to $81.80 a barrel at 11:55 a.m. on the New York Mercantile Exchange after touching $80.01, the lowest level since June 29, 2012. Prices are down 24 percent from June’s high of $107.26. The volume of all futures traded was more than double the 100-day average.
Brent for November settlement declined 19 cents to $84.85 a barrel on the London-based ICE Futures Europe exchange after reaching $83.37, the lowest intraday price since November 2010. Volume was 56 percent above the 100-day average for the time of day. Prices have decreased 27 percent from the June high. WTI traded at a $3.05 discount to Brent on the ICE.
Gasoline Prices
Prices rebounded from intraday lows as the dollar weakened. The Bloomberg Dollar Spot Index dropped as much as 1 percent to 1,057.07, the lowest since Sept. 24. “We are probably seeing the bottom here,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We didn’t break $80. There is no interest to see prices go below that level.”
The average regular gasoline price in the U.S. fell 0.9 cent a gallon to $3.177 yesterday, according to Heathrow, Florida-based motoring group AAA. That’s the lowest since February 2011.
U.S. stockpiles probably rose 2.45 million barrels last week, adding to the previous week’s gain of 5.02 million, a Bloomberg survey showed before an Energy Information Administration report tomorrow. The refinery utilization rate was forecast to decline for a third week, the survey showed. U.S. refiners schedule maintenance for September and October as they transition to winter from summer fuels.
The EIA, the Energy Department’s statistical arm, will release its weekly petroleum inventory report at 11 a.m. tomorrow in Washington, a day later than usual because of the Columbus Day holiday.
Domestic Output
Domestic production increased to 8.88 million barrels a day in the seven days ended Oct. 3, the highest level since 1986, according to EIA estimates. The U.S. will pump 9.5 million barrels a day in 2015, the most since 1970, the EIA said. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in North Dakota, Texas and other states.
“With U.S. production growing so strong, it’s a tough market to balance,” Greg Sharenow, executive vice president at Newport Beach, California-based Pacific Investment Management Co., who helps manage $26 billion of commodity investments, said by phone yesterday. The falling price may discourage U.S. producers from pumping more oil, said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas.
“As prices drop, the higher-cost producers are going to slow their drilling activity,” Williams said. “We may see slower production growth at current prices.”
OPEC Output
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, is raising output amid speculation its members are fighting for market share. The group pumped 30.47 million barrels a day in September, the most since August 2013, its monthly report on Oct. 10 showed. The group is meeting next month in Vienna.
“OPEC is going to continue to pump at these relatively high levels and tolerate these lower prices at least until the meeting in late November,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $120 billion of assets. “It looks like we’re going to test where U.S. production will begin to falter.”
Biggest Discount
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. Iran isn’t concerned about the slide in prices, according to its deputy oil minister. The period of declining prices will pass, said Roknoddin Javadi, who is also the managing director of National Iranian Oil Co., according to the state-run news agency Mehr.
The International Energy Agency said Oct. 14 that global oil demand will expand this year at the slowest pace since 2009. Consumption will rise by 650,000 barrels a day this year, 250,000 fewer than the prior estimate, the Paris-based IEA said in its monthly market report.
Bank of America Corp. lowered its 2015 forecast for Brent to $98 a barrel from $108, and its outlook for WTI to $90 from $96, according to an e-mailed report. Brent still has “strong support” at $85 a barrel because OPEC will probably trim the supply surplus, while WTI may fall to $75 as new pipelines bring additional supply to the U.S. storage hub at Cushing, Oklahoma, the bank said.
Copper Heads for Biggest Drop Since March on Demand Risk
Copper futures dropped the most in seven months after weaker U.S. and Chinese inflation data signaled slowing economies and weaker metals demand.
American wholesale prices unexpectedly fell in September for the first time in a year, while Chinese consumer costs rose at the slowest pace since January 2010, separate reports showed today. The two nations are the world’s biggest copper consumers. The metal fell 6.1 percent last quarter amid concern that supplies will top demand.
Supplies will swing to a surplus next year, the International Copper Study Group estimates. Even with signs of slowing demand, mining companies are spending more to increase production. Inventories monitored by exchanges in London, New York and Shanghai expanded in five of the past six weeks.
“Another round of concerning data here on the economic front is certainly weighing on copper,” David Meger, the director of metals trading at Vision Financial Markets in Chicago, said in a telephone interview. “Slower growth means a deflationary environment, which by definition is lower pricing, and lower prices puts pressure across the whole commodities market.” Copper futures for December delivery tumbled 2.4 percent to $3.016 a pound at 10:49 a.m. on the Comex in New York, heading for the biggest decline since March 11.
Demand will top refined production by 307,000 tons in 2014, the International Copper Study Group said yesterday. The shortfall will end next year, with output exceeding usage by 393,000 tons, the group estimates.
Rising Inventories
Stockpiles tracked by the London Metal Exchange climbed for a third straight day, the longest string of gains in a month. Retail sales in the U.S. dropped more than forecast in September, a government report showed today, adding to demand concerns.
Copper for delivery in three months dropped 2.1 percent to $6,660 a metric ton ($3.02 a pound) on the LME.
Also in London, tin for delivery in three months was unchanged at $19,650 a ton. The metal will trade between $20,000 and $21,500 this quarter, according to Sucden Financial Ltd. Prices will be supported as Indonesia’s ore-export ban stays in place and causes supply deficits, Steve Hardcastle, head of client liaison at Sucden, said yesterday.
Aluminum, nickel, lead and zinc dropped on the LME.
Corn Drops From Six-Week High as Dry Weather May Aid Crop
Corn futures fell from a six-week high as drier weather will help aid harvesting in the U.S., the world’s largest grower. Soybeans also declined.
Rain will remain “very limited” in the next two weeks, aiding crop collection, Bethesda, Maryland-based Commodity Weather Group said today. About 24 percent of U.S. corn was harvested as of Oct. 12, trailing the prior five-year average of 43 percent, the U.S. Department of Agriculture reported yesterday. Prices gained 6.9 percent in the prior two sessions, while while soybeans rose 4.6 percent, partly on concern that gathering would continue to be delayed.
This recent rally “was probably overdone and an opportunity for producers to make some sales,” Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri, said in a telephone interview. “It’s not a good time of the year to get real bullish during harvest.” Corn futures for December delivery fell 1.3 percent to $3.525 a bushel at 12:08 p.m. on the Chicago Board of Trade. Prices earlier reached $3.5825, the highest for a most-active contract since Sept. 3.
U.S. farmers are set to collect a record 14.475 billion bushels of corn this year, the USDA forecast on Oct. 10. Soybean output is also expected to rise to an all-time high of 3.927 billion bushels.
“Financial jitters” may also be playing a role in today’s decline in commodities prices, Hoops said. The Standard & Poor’s 500 Index of shares fell to the lowest since April.
Soybean futures for November delivery fell 0.1 percent to $9.635 a bushel, after climbing to $9.785, the highest since Sept. 18. Trading was 81 percent higher than the 100-day average for this time of day, data compiled by Bloomberg show. Wheat futures for delivery in December rose 0.7 percent to $5.1275 a bushel in Chicago, heading for a fourth straight session of gains.
source: Bloomberg
Commodities fell 6.5 percent this year, headed for the fourth annual decline and the longest slump on that basis since at least 1991, amid concern that economic growth is weakening as global equity markets lost $1.5 trillion last week. U.S. retail sales dropped more than forecast in September, data from the Commerce Department showed today.
“It is clear the positive momentum seen in this sector over the last 12 months has faded,” Jim Lennon, senior commodities consultant at Macquarie Group Ltd., said in a report e-mailed today. “Output from the world’s factories, mines and power stations shrank in August, a poor backdrop for commodities demand.” Copper fell from a three-week high in London, declining as much as 2.2 percent to $6,652 a metric ton, as China reported the slowest consumer inflation in more than four years, indicating that demand for the metal is weakening. The metal dropped 9.5 percent this year.
The metal for delivery in December slid 2.4 percent to $3.0155 a pound at 11 a.m. on the Comex in New York. Prices touched the highest level since Sept. 19 yesterday.
Oil is languishing in a bear market, with the International Energy Agency predicting the lowest demand growth since 2009. Brent crude dropped to as low as $83.37 a barrel in London, the lowest level in almost four years, before trading little changed. The West Texas Intermediate grade slipped to $80.01 in New York trading, the lowest since June 2012. The Organization of Petroleum Exporting Countries boosted output in September to the highest in 13 months, according to Bloomberg estimates.
“Oil prices are struggling to find a floor, as the market contemplates the possibility that OPEC may be happy to let prices fall,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail. Corn for December delivery fell 1.3 percent to $3.525 a bushel on the Chicago Board of Trade. U.S. farmers are set to collect a record 14.475 billion bushels of corn this year, the U.S. Department of Agriculture forecast on Oct. 10. Wheat also declined.
WTI Oil Near Two-Year Low on Glut; Brent Little Changed
West Texas Intermediate crude traded near the lowest level in more than two years as rising U.S. production increased supplies. Brent was little changed.
Both grades have collapsed into a bear market as shale supplies boost U.S. output to the most in almost 30 years and global demand growth weakens. The largest OPEC producers are responding by cutting prices, sparking speculation that they will compete for market share rather than reduce supply.
“The supply boom is ongoing,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Nobody sees any reason to buy so people just keep selling off. The Saudis will have to cut production to stabilize the price.” WTI for November delivery fell 4 cents to $81.80 a barrel at 11:55 a.m. on the New York Mercantile Exchange after touching $80.01, the lowest level since June 29, 2012. Prices are down 24 percent from June’s high of $107.26. The volume of all futures traded was more than double the 100-day average.
Brent for November settlement declined 19 cents to $84.85 a barrel on the London-based ICE Futures Europe exchange after reaching $83.37, the lowest intraday price since November 2010. Volume was 56 percent above the 100-day average for the time of day. Prices have decreased 27 percent from the June high. WTI traded at a $3.05 discount to Brent on the ICE.
Gasoline Prices
Prices rebounded from intraday lows as the dollar weakened. The Bloomberg Dollar Spot Index dropped as much as 1 percent to 1,057.07, the lowest since Sept. 24. “We are probably seeing the bottom here,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We didn’t break $80. There is no interest to see prices go below that level.”
The average regular gasoline price in the U.S. fell 0.9 cent a gallon to $3.177 yesterday, according to Heathrow, Florida-based motoring group AAA. That’s the lowest since February 2011.
U.S. stockpiles probably rose 2.45 million barrels last week, adding to the previous week’s gain of 5.02 million, a Bloomberg survey showed before an Energy Information Administration report tomorrow. The refinery utilization rate was forecast to decline for a third week, the survey showed. U.S. refiners schedule maintenance for September and October as they transition to winter from summer fuels.
The EIA, the Energy Department’s statistical arm, will release its weekly petroleum inventory report at 11 a.m. tomorrow in Washington, a day later than usual because of the Columbus Day holiday.
Domestic Output
Domestic production increased to 8.88 million barrels a day in the seven days ended Oct. 3, the highest level since 1986, according to EIA estimates. The U.S. will pump 9.5 million barrels a day in 2015, the most since 1970, the EIA said. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in North Dakota, Texas and other states.
“With U.S. production growing so strong, it’s a tough market to balance,” Greg Sharenow, executive vice president at Newport Beach, California-based Pacific Investment Management Co., who helps manage $26 billion of commodity investments, said by phone yesterday. The falling price may discourage U.S. producers from pumping more oil, said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas.
“As prices drop, the higher-cost producers are going to slow their drilling activity,” Williams said. “We may see slower production growth at current prices.”
OPEC Output
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, is raising output amid speculation its members are fighting for market share. The group pumped 30.47 million barrels a day in September, the most since August 2013, its monthly report on Oct. 10 showed. The group is meeting next month in Vienna.
“OPEC is going to continue to pump at these relatively high levels and tolerate these lower prices at least until the meeting in late November,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $120 billion of assets. “It looks like we’re going to test where U.S. production will begin to falter.”
Biggest Discount
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. Iran isn’t concerned about the slide in prices, according to its deputy oil minister. The period of declining prices will pass, said Roknoddin Javadi, who is also the managing director of National Iranian Oil Co., according to the state-run news agency Mehr.
The International Energy Agency said Oct. 14 that global oil demand will expand this year at the slowest pace since 2009. Consumption will rise by 650,000 barrels a day this year, 250,000 fewer than the prior estimate, the Paris-based IEA said in its monthly market report.
Bank of America Corp. lowered its 2015 forecast for Brent to $98 a barrel from $108, and its outlook for WTI to $90 from $96, according to an e-mailed report. Brent still has “strong support” at $85 a barrel because OPEC will probably trim the supply surplus, while WTI may fall to $75 as new pipelines bring additional supply to the U.S. storage hub at Cushing, Oklahoma, the bank said.
Copper Heads for Biggest Drop Since March on Demand Risk
Copper futures dropped the most in seven months after weaker U.S. and Chinese inflation data signaled slowing economies and weaker metals demand.
American wholesale prices unexpectedly fell in September for the first time in a year, while Chinese consumer costs rose at the slowest pace since January 2010, separate reports showed today. The two nations are the world’s biggest copper consumers. The metal fell 6.1 percent last quarter amid concern that supplies will top demand.
Supplies will swing to a surplus next year, the International Copper Study Group estimates. Even with signs of slowing demand, mining companies are spending more to increase production. Inventories monitored by exchanges in London, New York and Shanghai expanded in five of the past six weeks.
“Another round of concerning data here on the economic front is certainly weighing on copper,” David Meger, the director of metals trading at Vision Financial Markets in Chicago, said in a telephone interview. “Slower growth means a deflationary environment, which by definition is lower pricing, and lower prices puts pressure across the whole commodities market.” Copper futures for December delivery tumbled 2.4 percent to $3.016 a pound at 10:49 a.m. on the Comex in New York, heading for the biggest decline since March 11.
Demand will top refined production by 307,000 tons in 2014, the International Copper Study Group said yesterday. The shortfall will end next year, with output exceeding usage by 393,000 tons, the group estimates.
Rising Inventories
Stockpiles tracked by the London Metal Exchange climbed for a third straight day, the longest string of gains in a month. Retail sales in the U.S. dropped more than forecast in September, a government report showed today, adding to demand concerns.
Copper for delivery in three months dropped 2.1 percent to $6,660 a metric ton ($3.02 a pound) on the LME.
Also in London, tin for delivery in three months was unchanged at $19,650 a ton. The metal will trade between $20,000 and $21,500 this quarter, according to Sucden Financial Ltd. Prices will be supported as Indonesia’s ore-export ban stays in place and causes supply deficits, Steve Hardcastle, head of client liaison at Sucden, said yesterday.
Aluminum, nickel, lead and zinc dropped on the LME.
Corn Drops From Six-Week High as Dry Weather May Aid Crop
Corn futures fell from a six-week high as drier weather will help aid harvesting in the U.S., the world’s largest grower. Soybeans also declined.
Rain will remain “very limited” in the next two weeks, aiding crop collection, Bethesda, Maryland-based Commodity Weather Group said today. About 24 percent of U.S. corn was harvested as of Oct. 12, trailing the prior five-year average of 43 percent, the U.S. Department of Agriculture reported yesterday. Prices gained 6.9 percent in the prior two sessions, while while soybeans rose 4.6 percent, partly on concern that gathering would continue to be delayed.
This recent rally “was probably overdone and an opportunity for producers to make some sales,” Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri, said in a telephone interview. “It’s not a good time of the year to get real bullish during harvest.” Corn futures for December delivery fell 1.3 percent to $3.525 a bushel at 12:08 p.m. on the Chicago Board of Trade. Prices earlier reached $3.5825, the highest for a most-active contract since Sept. 3.
U.S. farmers are set to collect a record 14.475 billion bushels of corn this year, the USDA forecast on Oct. 10. Soybean output is also expected to rise to an all-time high of 3.927 billion bushels.
“Financial jitters” may also be playing a role in today’s decline in commodities prices, Hoops said. The Standard & Poor’s 500 Index of shares fell to the lowest since April.
Soybean futures for November delivery fell 0.1 percent to $9.635 a bushel, after climbing to $9.785, the highest since Sept. 18. Trading was 81 percent higher than the 100-day average for this time of day, data compiled by Bloomberg show. Wheat futures for delivery in December rose 0.7 percent to $5.1275 a bushel in Chicago, heading for a fourth straight session of gains.
source: Bloomberg