Market Commentary
Oil Drops on U.S. Industrial Output, Euro-Area Exports.
West Texas Intermediate oil fell after U.S. industrial production unexpectedly shrank and euro- area exports declined the most in five months, raising concern that fuel demand may weaken. Futures pared the week’s gain as January factory output slipped while euro-area exports dropped in December. Oil extended the intraday low in late afternoon as equities fell on news that Wal-Mart Stores Inc. had the worst sales start to a month in seven years. The shares reached a four-month high of $98.24 on Jan. 30. The year-to-date low is $91.52. “Industrial production shrank and the European data is keeping pressure on the oil market,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “Crude hit the wall around $98. That’s a major resistance level and a line in the sand that everybody is looking at.” Crude for March delivery slid $1.45, or 1.5 percent, to settle at $95.86 a barrel on the New York Mercantile Exchange. Trading was 33 percent above the 100-day average for the time of day at 3:26 p.m., after rising to above 100 percent of the average in early trading. Prices rose 14 cents this week, the ninth advance in 10 weeks. Brent for April fell 34 cents, or 0.3 percent, to settle at $117.66 a barrel on the London-based ICE Futures Europe exchange. Trading was 9.4 percent below the 100-day average. The European benchmark grade was at a premium of $21.25 a barrel to WTI futures for the same month. The difference was $20.10 yesterday, the narrowest since Feb. 5.
Gold Bears Braced for U.S. to China Growth Recovery.
Gold traders are the most bearish in more than a year on mounting speculation that improving economic growth from the U.S. to China will curb demand for this year’s worst-performing precious metal. Twenty analysts surveyed by Bloomberg this week expect prices to fall next week, while 11 were bullish and three were neutral, making the proportion of bears the highest since Dec. 30, 2011. Hedge funds cut bets on higher prices by 56 percent since October and are approaching their least bullish stance on gold since August, government data show. The metal fell to a five-month low today, and billionaire investors George Soros and Louis Moore Bacon reported yesterday that they had reduced stakes in exchange-traded products backed by gold. First-time jobless claims in the U.S. decreased more than estimated last week, while a Chinese government-backed survey showed manufacturing expanded in January. Growth will accelerate in the world’s two largest economies in coming quarters, according to more than 100 economists surveyed by Bloomberg. Investors cut record bullion holdings in exchange-traded products this year and added to funds backed by other precious metals that are used more in industry. Gold prices that rallied the past 12 years will probably peak in 2013, or already have, according to Goldman Sachs Group Inc. and Credit Suisse Group AG.
Copper Retreats as Slowing Industrial Production May Curb Demand.
Copper fell on speculation that slowing industrial production from Europe to the U.S. may curb demand and as inventories tracked by the London Metal Exchange reached the highest level since November 2011. Copper for three-month delivery fell as much as 0.2 percent to $8,280 a metric ton on the LME and traded at $8,286. The metal for delivery in March gained 0.2 percent to $3.765 a pound on the Comex in New York. Markets in China, the biggest consumer, are closed this week for the Lunar New Year holiday. Industrial production in France, Europe’s second-largest economy, probably declined 0.2 percent in December from the previous month, when itrose 0.5 percent, according to the median estimate of economists surveyed by Bloomberg before data today. Industrial production in the U.S. may have risen 0.2 percent in January from a 0.3 percent gain in a month earlier, data may show this week.
