Written by Sumit Roy  |

August 27, 2012

Market Wrap: Oil Falls Despite 1 Million Barrels Per Day Hurricane Disruption, Silver Tops $31 As Gold Steadies

Details

Most commodities rose, but silver continued to rally.

Commodities mostly fell today, as traders took profits after last week's run-up. Macroeconomic news flow was extremely light, with no major economic releases. However, investors looked toward Ben Bernanke's highly anticipated Jackson Hole speech on Friday, in which the fed chairman may provide more clues on the course of future monetary policy.

Meanwhile, in Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—fell by 4 basis points to 6.38 percent.

The U.S. Dollar Index was unchanged at 81.60.

• Gold was little changed, as the yellow metal digested the big gains of last week. Prices were last trading down by $0.29, or 0.01 percent, to $1670.35, while silver edged up by $0.22, or 0.72 percent, to $31—the highest level since early May.
  
  Platinum fell by $3.25, or 0.21 percent, to $1546.60 and palladium added $3, or 0.46 percent, to $655.50.
  
  "More cash is coming into the market from investors," Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS, told Reuters. "We expect there to be QE3 by September and gold will move substantially higher. The ETF demand has picked up and will continue to grow as prices rise."
  
  
• Crude oil initially rose, but ended the session lower despite the presence of Tropical Storm Isaac in the Gulf of Mexico, which disrupted production in the region. Close to 1 mmbbl/d, or 78 percent, of Gulf output has been temporarily shuttered due to the storm, according to the Bureau of Safety and Environmental Enforcement.
  
  "... this temporary supply risk, will lead to a drop in U.S. inventories," said Carsten Fritsch, analyst at Commerzbank. "The temporary shutdown of refineries in the Gulf will also lower gasoline supplies."
  
  
• Like oil, natural gas initially rose due to Tropical Storm Isaac, but ended the session lower as traders sold on the news. Approximately 2.2 bcf/d, or 48 percent, of Gulf natural gas output has been shuttered due to the storm.
  
  Prices were last trading down by $0.06, or 1.89 percent, to $2.65/mmbtu.
  
  
• Grains were slightly lower today. Corn was last trading down by $0.06, or 0.78 percent, to $7.96/bushel, while soybeans shed $0.10, or 0.56 percent, to $17.28 and wheat shed $0.05, or 0.55 percent, to $8.63.
  
  "It would appear that the rainfall in the U.S. Midwest has hardly improved the soybean crop prospects at all," said analysts at Commerzbank.
  
  
• Copper was last trading down by $0.01, or 0.23 percent, to $3.48/lb on Comex.
  
  "Many smelters have been buying domestic copper to fulfill their local contracts as the high prices of LME copper over Shanghai copper is pushing up their imported copper concentrate costs, further squeezing their profit margins," one Shanghai-based trader told Reuters.