MUMBAI: The strengthening US dollar against a basket of currencies continued to dampen sentiments on the commodity bourses. A slew of positive data coming out of the US, coupled with concerns on the rising fiscal deficit, pushed the euro to a 1-year low, which, in turn, spelt negative for commodities.
Also, with investors switching to the US dollar, seeking refuge, put pressure on commodity prices. Supporting the sentiment, weekly jobless claims data fell, while producer price data showed inflation as muted, reassuring investors that the economy is on a steady recovery path.
US crude oil futures fell more than $1 a barrel on Thursday after higher inventories signalled a demand in the world’s top oil consuming-nation was lagging the recovery in global economy. Crude inventories rose unexpectedly last week, government statistics showed, and fuel supplies climbed more than forecast.
The soft tone in prices persisted this morning as well. The firming up of the US dollar against a basket of currencies lowered the investment appeal of dollar-denominated commodities.
The benchmark June contract was last trading at $83.40 per barrel, down 30 cents. The contract had hit an intra-day low of $82.61 on Thursday.
Kuwait’s Oil Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah said Thursday the country’s crude output capacity stands at 3 million barrels per day.
Meanwhile, the Nigerian government has extended the priority status to the oil industry with the president giving his asset to the Nigerian Oil and Gas Industry Content Development Bill yesterday. Nigeria is the largest oil producer/exporter from the African region.
Gold prices edged lower towards $1,139 per ounce this morning, extending previous day’s losses. Gold futures on the Comex division of the New York Mercantile Exchange ended lower on Thursday, as the euro sank to near one-year lows against the US dollar. Silver dropped, but platinum extended gains.
Investors, rattled by the lack of transparency and details of the EU-IMF bailout plan, retreated from the commodities market and switched to the US dollar as a safe haven.
The spot was last trading at $1,139.75 per oz, down $1.2. Last night, the most active COMEX gold contract for June delivery dipped $5.9 to finish at $1,142.9.
Eurostat, the European Union’s statistical agency, said on Thursday that Greece’s deficit totalled 13.6% of GDP last year, which is worse than the government’s own estimate of 12.7% of GDP, and could be revised even wider, which triggered the early decline of the euro.
The reports that Greece might get a short-term bridge loan from its European neighbours before the EU-IMF bailout plan is initiated has brought some relief to investors and supported the euro for a short term before Moody's announcement to downgrade Greek debt crushed euro and sent it to touch the lowest point against the greenback in nearly one year.
Meanwhile, the yield on 10-year Greek bonds surged to a record high of 8.7%.
Shanghai copper is seen trading steady, but concerns over the debt crisis and abundant spot supply may sour sentiment, keeping the metal rangebound in the near term.
Three-month copper on the London Metal Exchange (LME) rose $10 to $7,725 a tonne, rebounding from losses the previous session. When Shanghai closed on Thursday, LME copper stood at $7,778. Other metal counters are seen trading sideways, tracking the movement in copper futures.
Domestic commodity counters maintained a soft tone, tracking overseas markets. MCX crude oil futures for May settlement moved between Rs 3,733 and Rs 3,717 before retracing to the current level of Rs 3,718 per barrel, down 0.4%.
Precious metals counters edged lower after the rupee retreated against the US dollar. MCX Gold for June settlement contract last quoted at Rs 16,627 per 10 grams after moving between Rs 16,667 and Rs 16,617 per 10 gram. MCX Silver May settlement contract lost 0.3% to trade at Rs 27,320 per kg, after having opened the session at Rs 27,375.
Base metal counters continued to slide lower tracking global markets. MCX copper for April settlement was last trading 0.3% lower at Rs 341.80 per kg. MCX zinc April contract was trading 0.4% lower at Rs 105.55 per kg.
