Written by Sumit Roy  |

August 28, 2012

Market Wrap: WTI Rises As Hurricane Shuts Down 93% Of Gulf Output, Gold Rises Despite Platinum Plunge

Details

Gold and oil rise, while platinum and natural gas fall.

Commodities were mixed today, as trading action remained choppy ahead of Ben Bernanke's highly anticipated Jackson Hole speech on Friday morning, in which the Fed chairman may provide more clues on the course of future monetary policy.

In today's economic data, the S&P Case-Shiller home price index registered a year-over-year increase for the first time since September 2010, which raised hopes that the U.S. housing market may have bottomed.

Meanwhile, in Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—rose by 19 basis points to 6.48 percent.

The U.S. Dollar Index fell by 0.4 percent to 81.33.

• The drop in the U.S. dollar helped to keep gold close to unchanged despite a notable decline in platinum prices. The South African government hopes that it can mediate a peace agreement between striking workers and their employer, the No. 3 platinum miner—Lonmin—by Wednesday. That would be the first step in negotiating a compromise and ending a feud that has left 44 dead.
  
  Gold was last trading up by $2.65, or 0.16 percent, to $1666.75, while silver rose by $0.17, or 0.55 percent, to $30.89.
  
  Platinum dropped $26.55, or 1.72 percent, to $1517.95 and palladium shed $12.50, or 1.92 percent, to $638.
  
  "Although South Africa was only the world's fifth-largest producer of gold, producing 186.8 tons last year, a prolonged supply outage would no doubt have far-reaching consequences, especially since investment demand is currently gathering pace again and thus removing gold from the market," said analysts at Commerzbank.
  
  
• Crude oil recovered some of the prior session's losses, as Hurricane Isaac bore down on the Gulf Coast. According to the last update from the Bureau of Safety and Environmental Enforcement, close to 1.3 mmbbl/d, or 93 percent, of Gulf of Mexico output has been temporarily shut in due to the storm.
  
  Brent was last trading up fractionally to $112.30, while WTI added $0.70, or 0.73 percent, to $96.17.
  
  "Crude trade will remain jittery this week as storm-related disruptions and refinery and storage tank fires in Venezuela keep investors on edge," said Andrey Kryuchenkov, an analyst at VTB Capital, told Bloomberg. "On top of that we have expectations of action from central bankers."
  
  
• Unlike oil, natural gas did not garner support from Hurricane Isaac, as the demand-reducing cooling effects of the storm outweighed the loss of production. Close to 3 bcf/d, or 67 percent, of Gulf natural gas output has been shut in due to the storm.
  
  Natural gas prices were last trading down by $0.02, or 0.87 percent, to $2.63/mmbtu.
  
  
• Grains were mixed today, as corn fell by $0.02, or 0.28 percent, to $7.92/bushel, while soybeans added $0.05, or 0.3 percent, to $17.35 and wheat lost $0.06, or 0.67 percent, to $8.56.
  
  "Normally at this time of the year, the market is under "Harvest pressure" and the prices start to go down," French analyst Agritel said. "Still, a number of operators remain skeptical about the potential drop in prices, given the current tense situation."
  
  
• Copper was last trading down by $0.01, or 0.42 percent, to $3.46/lb on Comex.
  
  "The focus is now on Jackson Hole, but with U.S. data of late not looking too bad the Fed may well want to keep its powder dry," said analysts at FastMarkets. "If no QE is announced then there is room for disappointment. As such, we would expect trading this week to be nervous and choppy."