Written by Sumit Roy  |

October 03, 2012

Market Wrap: Crude Oil Plunges After Inventory Report, NatGas Tumbles After 6 Days Of Gains, Gold Holds

Details

Energy underperformed, while gold edged higher.

Energy prices plunged after the release of the latest U.S. oil inventory figures, but other commodities were narrowly mixed in today's session. The day's economic data was positive. Payroll processor ADP said that U.S. private sector employers added 162K jobs in September, besting the 140K that was expected. The official government figures will be released on Friday.

Meanwhile, ISM said that its nonmanufacturing (services) index unexpectedly grew from 53.7 to 55.1 in September, putting it at the best level in six months.

The U.S. Dollar Index rose by 0.27 percent to 79.96.

• Gold was last trading up by $2.50, or 0.14 percent, to $1776.90, while silver shed $0.07, or 0.2 percent, to $34.55.
  
  Platinum was unchanged at $1683 and palladium edged up by $2.00, or 0.31 percent, to $653.
  
  "The real challenges will again drive the market," said Jeremy Friesen, a commodity strategist at Societe Generale. "We are going through a bit of a consolidation period until we see what happens. My suspicion is that we'll get more monetary policy responses from other central banks as the Fed program kicks off and the ECB program starts, probably by the end of this month. That's bullish for commodities like gold."
  
  
• Crude oil plunged after the release of the EIA's Weekly Petroleum Status report, but traders said the inventory data wasn't the culprit for the decline.
  
  U.S. crude oil inventories decreased by 0.5 million barrels, gasoline inventories increased by 0.1 million barrels, distillate inventories decreased by 3.7 million barrels and total petroleum inventories decreased by 2.4 million barrels last week, according to the EIA.
  
  Brent was last trading down by $3.44, or 3.08 percent, to $108.13, while WTI shed $3.78, or 4.11 percent, to $88.11.
  
  "Demand is increasing slightly, slowly, whereas supply is increasing a little bit faster," said Andy Sommer, a senior oil analyst at Axpo Trading. "I don't see big potential to the upside for oil. Of course there's always risk from the political side, but from a fundamental point of view there's more downward pressure."
  
  "There's plenty of supply," added Todd Horwitz, chief strategist at Adam Mesh Trading Group. "We're going lower. The demand picture is looking poor and the market's in the midst of a down trend."
  
  
• Natural gas was last trading down by $0.14, or 3.96 percent, to $3.39/mmbtu, as traders took profits after six straight sessions of gains. However, downside was limited by weather forecasts that continue to call for cooler-than-normal temperatures for October.
  
  
• The grain complex was narrowly mixed, as corn traded unchanged at $7.58/bushel, while soybeans added $0.01, or 0.1 percent, to $15.32 and wheat fell by $0.01, or 0.1 percent, to $8.71.
  
  "The news that was bullish during the summer has turned around. Rather than the supply getting smaller, it's now getting bigger," said Don Roose, president of U.S. Commodities.
  
  
• Copper was last trading down by $0.03, or 0.72 percent, to $3.77/lb on Comex.
  
  "We seem to go from QE3-related euphoria to reality-related depression. It's obviously too quick, but we haven't yet seen any real fundamental follow through to support the rally that was prompted by QE3," said analyst David Wilson of Citigroup.