Crude Oil falls as U.S. politics limit risk appetite

                Crude Oil futures traded lower in the early part of Tuesday’s Asian session as traders backed away from riskier assets on fears of U.S. government shutdown. 

On the New York Mercantile Exchange, light, sweet crude futures fell 0.08% to USD102.25 per barrel in Asian trading Tuesday. The November contract settled lower by 0.52% at USD102.33 per barrel on Monday. 

Oil traders appeared to gloss over some decent U.S. data and focused more political haggling in the U.S. that could result in a government closure. 

In U.S. economic news out Monday, the Federal Reserve Bank of Dallas reported earlier that its general business activity index increased to 12.8 in September from 5.0 in August, beating market calls for the index to remain unchanged.

Separately, industry data revealed that Chicago purchasing managers' index hit 55.7 in September from 53.0 in August, beating analysts' calls for a 54.0 reading. Those data points were strong enough to stoke speculation that the Fed could taper its monetary easing program before the end of this year. The U.S. is the world’s largest oil consumer. 

On Capitol Hill, Republicans and Democrats are arguing over provisions in Obamacare, President Barack Obama’s sweeping health care legislation that was passed in 2010. Republicans want Obamacare delayed and some provisions in the law to be stripped altogether, but Senate Democrats have balked at that idea. 

New York-traded oil slipped 4.9% in September, but was still able to muster a third-quarter gain of 6%. If the U.S. government shuts down before the end of the week, it could delay the release of the September jobs report due out Friday. 

Elsewhere, Brent crude futures for November delivery fell 0.10% to USD108.20 per barrel on the ICE Futures Exchange. - investing.com

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Gold rises on modest bargain hunting

             Gold futures rose in the early part of Tuesday’s Asian session as traders did some bargain hunting with the yellow metal after it was pushed lower Monday amid looming political uncertainty in the U.S. and Europe. 

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 0.20% to USD1,329.70 per troy ounce in Asian trading Tuesday. The December contract settled lower by 0.91% at USD1,327.00 per ounce on Monday. 

Gold futures were likely to find support at USD1,306.20 a troy ounce, Tuesday's low, and resistance at USD1,375.10, the high from Sept. 19. 

Despite gold’s appeal as a safe-haven investment, investors have in recent days dumped bullion even as the U.S. government heads towards a shutdown that could threaten the health of global financial markets. On Monday, President Barack Obama said a shutdown is preventable and said House Republicans are purposefully manufacturing the shutdown for political gain. 

Over the weekend, the House approved legislation that stripped Obamacare, the President’s landmark health care reform package, of key provisions. However, the Democrat-controlled Senate has vowed to not accept any budget package that waters down Obamacare. 

Gold was also under pressure following some U.S. data points. In U.S. economic news out Monday, the Federal Reserve Bank of Dallas reported earlier that its general business activity index increased to 12.8 in September from 5.0 in August, beating market calls for the index to remain unchanged.

Separately, industry data revealed that Chicago purchasing managers' index hit 55.7 in September from 53.0 in August, beating analysts' calls for a 54.0 reading. Those data points were strong enough to stoke speculation that the Fed could taper its monetary easing program before the end of this year. 

Elsewhere, Comex silver for December delivery fell 0.11% to USD21.685 per ounce while copper for December delivery rose 0.08% to USD3.319 per ounce. - investing.com

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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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Crude Oil falls as output increases in Libya, Texas

              Crude Oil futures traded slightly lower during Tuesday’s Asian session as some of Libya’s previously lost production came back online and on news of increased output at the Eagle Ford Shale in South Texas. 

On the New York Mercantile Exchange, light, sweet crude futures for November delivery fell 0.27% to USD103.31 per barrel in Asian trading Tuesday. The November contract settled lower by 1.11% at USD103.59 per barrel on Monday. 

Oil has declined in sharply in recent weeks has tensions in Syria have ebbed. In another sign a more docile near-term environment in the usually volatile Middle East, Iran has reportedly freed 80 political prisoners before President Hassan Rohani’s upcoming trip to the United Nations. Iran is the third-largest OPEC producer. 

Over the weekend, it was reported that Libyan output is on the rise after protesters reopened access to facilities late last week sent oil prices falling on Monday. Libyan production is expected to return to about 700,000 barrels per day in the coming weeks, well above recent levels of 243,000 barrels. 

Still, at 700,000 barrels per day, Libya’s oil output is roughly half what it was in early 2011 before the Arab Spring protests swept the Middle East. OPEC member Libya is home to Africa’s largest oil reserves. 

Elsewhere, the Texas Railroad Commission said the fields that comprise the Eagle Ford Shale are producing a combined 569,191 barrels per day, a 36% increase from last year. May output was revised to 656,853 barrels a day from the preliminary report of 617,884, according to Bloomberg. Eagle Ford is one of the largest oilfields in the U.S. 

Meanwhile, Brent crude futures for November delivery inched down 0.02% to USD107.98 per barrel on the ICE Futures Exchange. - investing.com

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Gold falls again on tapering concerns

                Gold futures traded modestly lower in the early part of Tuesday’s Asian session as tapering concerns continue to loom large. 

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery inched down 0.04% to USD1,326.50 per troy ounce in Asian trading Tuesday. The December contract settled lower by 0.41% at USD1,327.00 per ounce on Monday. 

Gold futures were likely to find support at USD1,291.70 a troy ounce, Wednesday's low, and resistance at USD1,375.10, Thursday's high.

While gold rallied last Thursday on news that the Federal Reserve will not taper its USD85 billion-a-month in bond purchases, the yellow metal and other precious metals have given up all of those gains and then some. 

Ultra-loose monetary policies that include asset purchases drive down interest rates to spur recovery, weakening the dollar in the process and making gold an attractive hedge. 

Some members of the Fed are sending mixed messages regarding tapering, adding an element of confusion to financial markets. On Friday, however, St. Louis Fed President James Bullard said that the U.S. central bank could taper its stimulus program during its October meeting, which sparked a round of profit-taking that sent gold prices falling.

However, on Monday, Federal Reserve Bank of New York President William Dudley said the stimulus program would stay in place until data show that recovery will be sustained. 

"Our decisions on how to adjust our policy tools—for example, the pace of asset purchases and forward guidance with respect to the level of short-term rates—must be rooted in the ongoing flow of information that informs our judgments about the prospects for a sustainable recovery," said Dudley. 

Uncertainty appears to be what is hampering gold at the moment, though may market participants are convinced tapering will happen before year-end with some expecting it will occur next month. 

Elsewhere, Comex silver for December delivery fell 0.18% to USD21.818 while copper for December delivery dropped 0.42% to USD3.284.  - investing.com

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Metals In The Morning – Chinese Data & Fed Speakers In View

           Precious metals spent last week on a roller coaster ride all on hopes and dreams of Fed tapering. Those dreams were dashed on Wednesday after Mr. Bernanke and team, held rates and policy in place for the time being. Gold is down at 1320.80 falling close to $12 in the Asian session to start the week. Silver fell harder to trade at 21.473 giving up 2% this morning. Platinum and palladium diverged with platinum trading at 1429.60 slightly in the red and palladium gaining 30 cents to trade at 717.10. Copper is the surprise this morning as industrial metals do not seem to be responding to positive data from China. Copper is down 33 points after the data release to trade at 3.272.

Precious metals slumped as comments from a slate of Federal Reserve officials cause traders to reassess their expectations for the duration of the central bank’s bond-buying program. Gold had surged by nearly five per cent during the previous session, the largest rally in percentage terms since March 2009.

Bearish gold traders scrambled to close out their bets on lower prices following the Fed’s decision late Wednesday to leave its $US85 billion-a-month bond-buying program unchanged.

James Bullard, president of the Federal Reserve Bank of St Louis, said on Bloomberg TV on Friday that “a small taper is possible in October”. Bullard also said the Fed’s move this week to hold to the pace of bond purchases was a “close decision”.  Also on Friday, Kansas City Fed President Esther George said she was worried that the Fed’s ongoing efforts to stimulate the economy fail to account for economic progress already made. George was the lone dissenting vote at the Fed’s policy meeting on Wednesday.

Indian gold imports could fall during this year, which may also curb down the rally of gold prices. According to one report, India’s gold imports may fall by 11% (y-o-y). Conversely, the Rupee gained more than 8.9% of its value in the recent month. If the Rupee continues its upward trend, this could pull up gold and silver prices. In China, the ongoing recovery of the economy along with the strong demand for gold and silver are likely to keep the prices of gold and silver from further falling.  China’s economy showed new signs of strength in September as an initial gauge of manufacturing activity rose to a-six month high The preliminary HSBC China Manufacturing Purchasing Managers Index rose to 51.2 in September compared with a final reading of 50.1 in August, HSBC Holdings PLC said on Monday.

Lastly gold holdings of SPDR gold trust ETF slipped again for the third consecutive week.  During the month, the ETF’s gold holdings fell by 1.18%. The ETF was also down by 32.62% since the beginning of 2013 (up-to-date). Current gold holdings are at 910.19 tons. If the ETF’s gold holdings keep falling, this will signal that the demand for gold as an investment is weakening.

Industrial metals prices edged lower after hitting their highest in almost a month as investors, following the U.S. Federal Reserve’s decision to stick to its stimulus program, shifted focus back to fragile fundamentals but declines were limited by Chinese data this showing that manufacturing rose to a six-month high in Sep, signaling that a rebound in the Chine’s economy is gaining steam. The preliminary reading of 51.2 for PMI by HSBC Holdings Plc and Markit Economics compared with a 50.9 by Bloomberg. The gauge was at 50.1 in Aug. - fxempire.com

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Natural gas futures - Weekly review: September 16 - 20

                     Natural gas futures ended Friday’s session at a four-day low, as forecasts showing mild temperatures across much of the U.S. through late-September weighed.

On the New York Mercantile Exchange, natural gas futures for delivery in October fell 0.9% on Friday to settle the week at USD3.687 per million British thermal units. 

Prices declined by as much as 1.7% earlier in the day to hit a session low of USD3.656, the weakest since September 16. 

Nymex gas prices settled 0.2% higher on Thursday at USD3.720 per million British thermal units, as a round of profit taking kicked in after prices rallied to a two-month high of USD3.820.

Despite Friday’s losses, natural gas prices advanced 0.3% on the week.

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 Midwest for the next ten days.

Bearish speculators are betting on the mild weather to reduce demand for the fuel with autumn’s low-demand shoulder season looming.

The shoulder season is the period in autumn when gas demand typically slackens and prices fall.

Prices rallied to the highest level since July 19 on Thursday after the U.S. Energy Information Administration said natural gas storage in the U.S. rose by 46 billion cubic feet last week, below market expectations for an increase of 56 billion cubic feet.

Inventories increased by 61 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 74 billion cubic feet.

Total U.S. natural gas storage stood at 3.299 trillion cubic feet as of last week, 0.5% above the five-year average for the same week and 5.4% below last year's unusually high level.

Early injection estimates for this week’s storage data range from 70 billion cubic feet to 80 billion cubic feet, compared to a 79 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 75 billion cubic feet.

Elsewhere in the energy complex, light sweet crude oil futures for November delivery settled at USD104.75 a barrel by close of trade on Friday, losing 2.6% on the week. 

Meanwhile, heating oil for October delivery fell 3.49% on the week to settle at USD3.006 per gallon by close of trade Friday. investing.com

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