Base metals close higher

              Base metals on the London Metal Exchange (LME) have closed higher, after a senior Federal Reserve official said the bank may keep pumping money into the US economy beyond October.

At the close of open-outcry trading in the London ring on Friday, LME 3-month copper was 0.7 per cent higher on the day at $US7,295 a metric ton.

Aluminum rose 0.9 per cent to $US1,840 a ton, while nickel closed 1.2 per cent higher at $US13,985 a ton.

In early European trading, the metals were lifted as the US dollar weakened against other currencies including the euro, making dollar-priced assets more appealing to buyers holding the other currencies.

Analysts said book-squaring ahead of the end of the month and end of the quarter was lending support to prices.

Later, Charles Evans, president of the Federal Reserve Bank of Chicago, suggested the central bank could refrain from winding down its support for the economy until 2014.

'We could make a decision in October,' Evans said on the sidelines of a bank conference in Oslo

'We need to see further developments of the positive variety for the economy to have that added confidence. It wouldn't surprise me if we go a little bit longer.'

The Fed's bond-buying program has supported demand for base metals by stoking activity in industries that consume the metals, such as construction and manufacturing.

Some market watchers said this week's moderate price gains were likely to be short-lived. Starting October 7, the base metals industry will gather in London for the exchange's annual LME Week.

'In the run-up to LME week in London, global manufacturing is showing signs of improvement and base metals may get a short-term price lift,' noted Barclays analysts in a report on Friday.

The bank added that emerging markets, big consumers of commodities, still look fragile, with much of the improvement in Chinese growth stemming from policy support to stabilise rather than boost growth.

Recent price gains will be difficult to sustain, said the bank, without a corresponding improvement of the supply-and-demand fundamentals that underlie industrial metal prices.

'We favour selling into this price strength,' it said. - bigpondnews.com

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Natural gas futures - Weekly review: September 23 - 27

                   Natural gas futures ended Friday’s session marginally higher, as investors returned to the market to close out bets on lower prices after futures bounced off a key support level on Thursday.

On the New York Mercantile Exchange, natural gas futures for delivery in November inched up 0.6% on Friday to settle the week at USD3.589 per million British thermal units. 

Nymex gas prices settled 0.6% higher on Thursday at USD3.567 per million British thermal units, as a round of bargain buying and short-covering kicked in after prices tumbled to a five-week low of USD3.450 earlier in the session.

Despite Friday’s modest gains, the November natural gas still contract lost 4.4% on the week.

Prices tumbled to the lowest level since August 27 on Thursday after the U.S. Energy Information Administration said natural gas storage in the U.S. rose by 87 billion cubic feet last week, above market expectations for an increase of 76 billion cubic feet.

Inventories increased by 79 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 75 billion cubic feet.

Total U.S. natural gas storage stood at 3.386 trillion cubic feet as of last week, nearly 1% above the five-year average for the same week and approximately 5% below last year's unusually high level.

Early injection estimates for this week’s storage data range from 82 billion cubic feet to 100 billion cubic feet, compared to a 77 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 82 billion cubic feet.

Prices turned higher towards the end of the session as market players closed out bets on falling prices to lock in gains ahead of the expiration of the October contract on Thursday.

Meanwhile, market players continued to monitor near-term weather forecasts to gauge the strength of demand for the fuel.

Updated weather forecasting models pointed to mostly normal to below-normal temperatures across most parts of the U.S. Northeast and Midwest for the next 10-to-14 days.

Demand for natural gas tends to fluctuate in the autumn based on cold weather and heating demand.

Elsewhere in the energy complex, light sweet crude oil futures for November delivery settled at USD102.87 a barrel by close of trade on Friday, losing 1.8% on the week. 

Meanwhile, heating oil for November delivery fell 0.79% on the week to settle at USD2.982 per gallon by close of trade Friday. - investing.com

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Crude oil futures - Weekly review: September 23 - 27

                New York-traded crude oil futures ended Friday’s session close to an 11-week low, as growing worries over a looming U.S. government shutdown and receding fears over a disruption to supplies from the Middle East weighed. 

On the New York Mercantile Exchange, light sweet crude futures for delivery in November declined 0.15% on Friday to settle the week at USD102.87 a barrel by close of trade. 

Prices fell by as much as 0.65% earlier in the day to hit a session low of USD102.37 a barrel, close to an 11-week low of USD102.20 a barrel hit earlier in the week.

The November contract settled 0.35% higher at USD103.03 a barrel on Thursday.

Oil futures were likely to find support at USD102.13 a barrel, the low from July 8 and resistance at USD105.09 a barrel, the high from September 23.

On the week, Nymex oil futures lost 1.8%, the third consecutive weekly decline.

Concern that U.S. lawmakers will fail to arrange a budget deal preventing a government shutdown next week dampened the appeal of growth-linked assets.

Congress must pass a short-term budget by midnight on Monday in order to avoid a government shutdown. 

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Later this month, Congress will have to extend the U.S. debt ceiling which the U.S. Treasury Department has estimated will be reached by October 17.

Meanwhile, concerns over a disruption to supplies from the Middle East continued to fade away after the U.S. and Russia agreed on a draft U.N. Security Council resolution aimed at eliminating chemical weapons in Syria.

Futures surged to a 27-month high of USD112.22 a barrel on August 28 amid indications the U.S. was close to taking military action against Syria for its alleged use of chemical weapons against civilians. 

But prices have since lost nearly 5% after the U.S. and Russia reached a diplomatic solution on how to handle Syria’s chemical weapons on September 14.

While Syria is not a major oil producer, investors fear that the two-year-old civil war could spill over to affect oil supplies in nearby countries.

Thawing tensions between the U.S. and Iran also added to the selling pressure.

The two countries began talks on Thursday to resolve their ongoing standoff over Tehran's nuclear program.

Countries in the Middle East were responsible for nearly 35% of global oil production in 2012.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for November delivery shed 0.55% on Friday to settle the week at USD108.63 a barrel.

On the week, the London-traded Brent contract lost 0.55%, while the spread between the Brent and the crude contracts stood at USD5.76 a barrel by close of trade on Friday.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for indications on whether the economic recovery is sufficiently strong for the Federal Reserve to start rolling back its USD85-billion-a-month bond-buying program. 

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Markets will also be watching developments in U.S. budget negotiations, as well as key manufacturing data out of China to gauge the economic strength of the world’s second largest oil consumer. - investing.com

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Gold / Silver / Copper futures - Weekly review: September 23 - 27

                 Gold futures rallied 1% to hit a one-week high on Friday, as concerns over a possible U.S. government shutdown and hopes of continued stimulus from the Federal Reserve boosted sentiment on the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 1.15% on Friday to settle the week at USD1,339.20 a troy ounce. 

Gold futures rose by as much as 1.5% earlier in the session to hit a daily high of USD1,344.40 a troy ounce, the strongest level since September 10. 

The December contract settled 0.9% lower at USD1,324.10 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,306.20 a troy ounce, the low from September 24 and resistance at USD1,366.50, the high from September 20.

On the week, the precious metal advanced 0.5%, the second consecutive weekly gain.

Concern that U.S. lawmakers will fail to arrange a budget deal preventing a government shutdown next week boosted the safe-haven appeal of the precious metal.

Congress must pass a short-term budget by midnight on Monday in order to avoid a government shutdown. 

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Later this month, Congress will have to extend the U.S. debt ceiling which the U.S. Treasury Department has estimated will be reached by October 17.

Meanwhile, gold traders continued to watch speeches from Federal Reserve officials for clues on monetary policy.

Speaking on Friday, Chicago Federal Reserve Bank President Charles Evans said that there is a chance the central bank will not move to taper its bond-buying program until early 2014.

His comments came after three top Fed officials said on Thursday the central bank had confused markets over its policy outlook.

Mixed U.S. economic data on Friday further added to uncertainty about how quickly the Fed will scale back its USD85-billion-a-month bond-buying program. 

The Thomson Reuters/University of Michigan consumer sentiment index fell to a four-month low of 77.5 in September from 82.1 the previous month.

Separately, official data showed that U.S. personal spending rose 0.3% in August, in line with expectations, after an upwardly revised 0.2% increase the previous month.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

The precious metal is on track to post a loss of nearly 21% on the year as traders bet an improving U.S. economy would lead the Fed to unwind its stimulus program by the year's end.

The central bank is scheduled to meet October 29-30 to review the economy and assess policy.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for indications on whether the economic recovery is sufficiently strong for the Fed to start rolling back its stimulus program. 

Markets will also be watching developments in U.S. budget negotiations.

Elsewhere on the Comex, silver for December delivery inched up 0.3% on Friday to settle the week at USD21.83 a troy ounce. Silver prices settled 0.55% lower at USD21.76 on Thursday.

On the week, silver future prices declined 0.4%, the third consecutive weekly loss.

Meanwhile, copper for December delivery advanced 0.7% on Friday to close the week at USD3.329 a pound. On Thursday, copper futures rallied 1.1% to settle at USD3.307 a pound.

Prices of the red metal advanced 0.3% on the week.

Copper traders will be closely watching key manufacturing data out of China next week, to gauge the economic strength of the world’s largest copper consumer.   - investing.com

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