Written by Sumit Roy  |

July 12, 2012

Market Wrap: Oil Rises, Gold Falls Ahead Of Key China GDP Data, Corn Jumps 4%

Details

Commodities traded mixed today.

Commodities traded mixed today, as grains resumed their surge, while energy also benefited. However, fresh two-year highs in the U.S. dollar pressured gold.

Today's economic data featured unexpectedly good news. The Department of Labor said that the number of people filing for unemployment benefits in the U.S. fell sharply last week—from 376K to 350K—the lowest level since March 2008. But the figure may be distorted by the July 4 holiday and unusual activity at auto plants, said some analysts. Next week's figure may give a clearer indication of the health of the labor market.

Meanwhile, traders continue to brace themselves for the biggest economic release of the week, China's second-quarter GDP figures, which are due out tonight at 10 p.m. EST. Analysts expect the Chinese economy to have grown by 7.7 percent year-over-year in the quarter, the slowest rate since the second quarter of 2009, during the global financial crisis.

• The strength in the U.S. dollar once again took its toll on gold, which fell by $9.45, or 0.6 percent, to $1566.95. Deflationary concerns in the near-term may leave the yellow metal "fairly moribund over the summer period,'" Deutsche Bank's Daniel Brebner told HAI in a recent interview.
  
  However, he adds that gold is "one of the best places to put your money over the medium to long term." Brebner sees prices potentially reaching $2000 by early 2013 amid continued stimulus by central bankers around the world.
  
  Meanwhile, silver was also lower today, and was last trading up by $0.11, or 0.4 percent, to $27.24. Platinum lost $13.75, or 0.96 percent, to $1414.25 and palladium shed $6.25, or 1.07 percent, to $577.25.
  
  
• Crude oil was higher today, as Brent and WTI continued to hover just above and below the $100 and $85 levels, respectively.
  
  Brent was last trading at $100.90, a gain of $0.67, or 0.67 percent, while WTI was unchanged at $85.81.
  
  The latest Oil Market report from the International Energy Agency painted a mixed picture of oil fundamentals. The agency sees global demand growing by 1 mmbbl/d in 2013 after growing 0.8 mmbbl/d this year.
  
  Non-OPEC supply is expected to grow a mere 0.4 mmbbl/d this year despite a surge in U.S. production, as declines elsewhere offset. The IEA sees non-OPEC growth of 0.7 mmbbl/d in 2013, but its forecasts have been consistently too optimistic.
  
  Finally, OPEC's output remained near four-year highs at 31.8 mmbbl/d in June, according to the IEA. Based on that output level, global oil supply will exceed global oil demand by 600 Kbbl/d in the third quarter of this year.
  
  
• Natural gas rose after the EIA reported that storage levels rose by 33 billion cubic feet last week. Prices were last trading at $2.91/mmbtu, up $0.06, or 1.93 percent. See our latest report for more insight on the outlook for gas.
  
  
• The grain sector rebounded today after falling in the prior session on profit-taking. Corn was last trading up by $0.31, or 4.16 percent, to $7.82/bushel, while soybeans rose by $0.02, or 0.12 percent, to $16.25 and wheat gained $0.34, or 4.18 percent, to $8.42.
  
  "The extent to which the U.S. Department of Agriculture revised its previous crop estimate downwards came as quite a surprise," analysts at Commerzbank said.
  
  "Despite a significant expansion of acreage, there will be no record harvest, contrary to previous expectations. The sharp reduction in average per-acre yields by 20 to 146 bushels per acre has put paid to that," Commerzbank added.
  
  
• Copper was last trading at $3.41/lb on Comex, down $0.03, or 0.91 percent. Traders of copper will be especially keen to see the latest economic growth figures from China later today.