MUMBAI: Crude oil, gold and other precious metal counters snapped the recent rally in prices as financial concerns in the Eurozone resurfaced, which caused further decline in the euro against the dollar. Also, the strong economic data weighed on various commodity counters apart from helping the dollar to gain against the basket of currencies. Meanwhile, traders in Europe and parts of Asian markets returned after an extended weekend, markets remained closed on Monday on account of the Easter holiday, were seen rushing to cover their position and protecting from entering into dip losses.
Crude oil retreated from 18-month highs after rallying for five sessions in a row, as the dollar strengthened against the basket of currencies, following strong economic data. The benchmark contract of WTI crude oil fell 22 cents to trade at $86.40 a barrel. On Monday, crude oil futures rallied 2.1% and settled at $86.62. The contract reached an intra-day high of $86.90, the highest level since October 2008.
Oil exporters start raising prices as they see demands are set to improve further. Saudi Aramco, the world's largest state-owned oil company, increased official selling prices for its extra light crude oil to customers in the US and Asia for May. The price will be 40 cents higher than April's. Meanwhile, oil inventory, crude oil inventory has risen for 9 weeks and the current level is 6.5% above 5-year average. Although stockpiles for oil products, such as gasoline and distillate, have dropped, they are still holding at very high levels.
Gold surrendered recent gains that took the metal to a four-week high in previous session on rising investment demand. The dollar gaining strength against the Euro is seen applying pressure on further price rise. Spot gold was at $1,126.95 an ounce, down marginally from New York's notional close on Monday, when it hit an intraday high of $1,133.20, its strongest level since March 8. US gold futures for June delivery fell $5.2 an ounce to $1,128.30.
Base metal counters maintained a strong trend on London Metal Exchange (LME). Copper futures led the complex higher by rising to its highest since August 2008. The red metal was seen dragging Shanghai prices higher early this morning, after a spate of strong numbers infusing power in the counter.
The US Labor Department said on Friday that nonfarm payrolls rose 162,000, the largest number of jobs added in three years. Separate reports showing pending sales contracts for existing homes rose unexpectedly in February and further expansion in the services sector added to the market's bullish temperament.
Three-month copper on the LME crossed a psychologically important level of $8,000 led by strong buying interest. The contract touched highest level since August 2008. The contract last traded at $7,950 a tonne, up $65.
Cochilco will likely raise its 2010 average copper price outlook by about 6.5% to $7,275 a tonne due to strong demand from top-consumer and as developed economies gradually recover from the global economic crisis.
Domestic commodities trended mixed since morning, influenced by both negative and positive market forces. Impact of negative cues from the overseas markets was neutralised by weaker rupee. Also, the late recovery in the domestic equities aided to recovery in the commodity prices.
Crude oil counters benefited from the positive trend in equity. MCX crude oil futures for April settlement moved between Rs 3,866 and Rs 3,836 before retracing to current level of Rs 3,852 per barrel. MCX Gold for June settlement contract last quoted at Rs 16,465 per 10 grams after moving between Rs 16,512 and Rs 16,425 per 10 gram. MCX Silver May settlement contract traded 0.4% lower at Rs 27,309 per kg, after having opened the session at Rs 27,380. The counter suffered from profit taking at higher level.
Apart from silver, the base metal counters too surrendered to profit taking. MCX copper for April settlement was last quoting at Rs 353.55 per kg, after opening the session at Rs 354.50. MCX zinc April contract lost nearly 1% to trade at Rs 106.05 per kg.
