Written by Sumit Roy  |

May 03, 2012

Market Wrap: Oil Plunges To 3-Month Low Ahead Of Crucial Jobs Report, Silver Sinks To $30, NatGas Outperforms

Details

With the exception of corn and natural gas, most commodities fell today.

Commodities and stocks fell sharply today, as traders sold ahead of Friday's highly anticipated nonfarm payrolls report. Expectations for the report have come down markedly following Wednesday's disappointing figures from payroll processor ADP. Employers are expected to have added 160K jobs in April, while the unemployment rate may hold steady at 8.2 percent.

On the positive side, a sharp decline in initial jobless claims raised hopes that the recent slowdown in employment growth in the United States may be fleeting. The number of people filing for unemployment claims fell to 365K last week from an upwardly revised 392K the week before — the highest level of the year.

In other news, the ISM nonmanufacturing gauge fell from 56 to 53.5 in April, below the 55.3 that was anticipated, a four-month low.

Meanwhile, ICSC said that chain store sales grew by 0.6 percent year-over-year in April.

• Gold led precious metals lower today after the European Central Bank left interest rates unchanged at 1 percent, as expected.
  
  The yellow metal was last trading lower by $19.60, or 1.19 percent, to $1634.10/oz, while silver shed $0.60, or 1.96 percent, to $30.05. Platinum fell by $27, or 1.73 percent, to $1532 and palladium lost $9, or 1.35 percent, to $658.
  
  
• Crude oil prices fell sharply today amid today's broad-based selling. Brent was last trading down by $2.11, or 1.79 percent, to $116.09—the lowest level since February, while WTI shed $2.67, or 2.54 percent, to $102.55.
  
  As we wrote in Wednesday's Crude Oil Report, prices may continue lower as output in OPEC and the United States surges.
  
  
• Natural gas prices bucked today's trend to rise after the EIA reported a 28 bcf injection into inventories for last week. Gas was last trading higher by $0.09, or 4.08 percent, to $2.35/mmbtu and may continue higher as the market tightens.
  
  
• The grain complex was mixed today, as corn traded up by $0.06, or 0.9 percent, to $6.48/bushel, while soybeans fell by $0.12, or 0.8 percent, lower to $14.68, and wheat was unchanged at $6.07.
  
  "China could be on a buying spree," said Lynette Tan, an analyst at Phillip Futures. "They will not have enough corn to meet their demand."
  
  
• Copper prices were last trading lower by $0.05, or 1.37 percent, to $3.74/lb on Comex.
  
  "There's a lot of people who are concerned that here we are in early May, which for the past two years has been a bloodbath ...The picture for Chinese and European demand will get better in the second half. But near term there are risks," said Nic Brown of Natixis.