Written by Drew Voros  |

February 16, 2012

Market Wrap: Brent Crude Oil Breaks Through $120, Gold ($1726) & Silver Rebound On US Data

Details

Commodities rebound from session lows on strong U.S. economic reports. Brent crude oil breaks through a key resistance level.

Commodities across the board reversed course and turned most losses into gains after a series of positive U.S. economic reports revealed the country’s recovery is broad and sustained. That helped offset earlier losses from another delay by EU leaders in granting a bailout to Greece, which renews concerns about a default, increases eurozone borrowing costs and pushed the euro lower.

Encouraging news on the U.S. labor and housing fronts pushed the country’s financial markets higher despite the concern over Greece’s debt.

New claims for unemployment benefits fell more than expected last week to a four-year low. Initial claims for state unemployment benefits dropped 13,000 to a seasonally adjusted 348,000, the Labor Department said, the lowest since March 2008. Housing starts rose in January, and December’s figures were revised upward. And finally, consumer confidence rose to its highest level in a year.

After markets digested the U.S. economic data, bulls returned to commodities and bought the dips.

• Gold rallied to gain back nearly all of its losses, settling lower by $1.67, or 0.10 percent, to $726.19/oz, while silver followed suit by erasing a nearly 2 percent loss and settling flat at $33.44. However, palladium outperformed all commodities by rising $14.63, or 2.14 percent, to $697.75, as the metal's industrial demand as an auto emission is seen increasing on the back of the U.S. recovery. Platinum lost $8.75, or 0.54 percent, to $1626.
  
  
• Crude oil rallied again today two days after Iran announced it would cut oil exports to six European countries, increasing demand for Brent in particular, which broke through a key resistance of $120/bbl. Brent rose $1.18, or 0.99 percent, to $120.11, while its benchmark counterpart in the U.S., WTI, gained $0.29, or 0.28 percent, to $102.09.
  
  “The primary reason we are higher is the Iran fear premium,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York.

• Grains also recovered losses during the trading session. Corn made the biggest move, rising $0.07, or 1.16 percent, to $6.34/bushel, which pushes its price past wheat, which inched up $0.01 to $6.27. Soybeans recovered most its losses as well, by falling $0.01, or 0.10 percent, to $12.59.

• Copper joined the rebound and reversed its earlier losses into a gain of $0.50, or 0.13 percent, to $3.80.
  
  "From a fundamental perspective, the copper market is very tight, but if the (eurozone) crisis deepens, it will impact global growth and developing countries' consumption of raw materials," said Caroline Bain, an economist with the Economist Intelligence Unit.