MUMBAI: A slew of negative news flow from the US continued to weigh on its currency and apparently on the commodity futures. While, sluggish economic data raised concerns over demand for key commodities from the world’s largest economy, US dollar easing against major counterparts diminished commodity investment appeal. Not to forget, the discouraging comments from the Federal Reserve-FOMC meet over the economic outlook has added to pressure on commodity counters.
Crude oil declined for a third day after government reports showed an unexpected gain in supplies and a decline in purchases of new homes. Crude oil for August delivery dropped as much as 42 cents to $75.93 a barrel in electronic trading on the New York Mercantile Exchange. It was last trading at $76.23 a barrel, down 11 cents from previous level. Yesterday, the contract fell $1.50 to $76.35, the biggest drop for a front-month contract since June 11.
Meanwhile, imports of crude oil climbed 4.3% to 10.1 million barrels a day, the highest level since the week ended January 2, 2009, the Energy Department (EIA) report showed. Fuel imports surged 10% to 2.32 million barrels a day. Refineries operated at 89.4% of capacity, up 1.5 percentage points from the prior week and the highest level since April, the report showed.
The International Energy Agency, an adviser to oil- consuming nations, said in a report yesterday that growth in world oil demand will slow in the next five years as the pace of Chinese consumption moderates. The IEA estimates that the rate of annual demand growth will shrink each year between now and 2015. Consumption will climb 1% to 91.93 million barrels a day in 2015, down from 1.5% growth in 2010, according to the Paris-based agency’s Medium-Term Oil and Gas Markets 2010 report.
Gold edged down even as the Federal Reserve's vow to keep rates low underpinned investor appetite for the precious metal. The yellow metals its momentum was limited after it marked a recorded high earlier this week. Spot gold was down 0.8% at $1,227.60 per ounce, hovering well below Monday's record around $1,264.
On Wednesday, the metal fell as low as $1,224.30, its lowest in more than a week after a report showed sales of new US homes dropped a record 33% in May to the weakest level in at least four decades. Gold in theory benefits from low interest rates, as they keep down the "opportunity cost" of holding non-interest bearing assets such as bullion.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,313.14 tonnes as of June 23, unchanged from a record marked the previous business day.
London copper futures rose in early trade, recovering previous session losses linked to a drop in new home sales to the lowest level in at least four decades. Shanghai copper mimic London 's gains and trade higher, although trading remain subdued as the market looks for fresh direction. Three-month copper on the London Metal Exchange (LME) gained $40 to $6,595 a tonne.
Sales of new single-family had fallen to the lowest level in four decades in May as a boost from a popular tax credit faded, adding to fears of a slowing economic recovery.
The Federal Reserve acknowledged a faltering pace of US economic recovery as it renewed its vow to hold benchmark interest rates exceptionally low for an extended period.
Domestic commodity futures were largely trading mixed amid tepid trader participation. Rupee easing against the US dollar prevented commodity counters from posting sharp decline.
MCX crude oil futures for July settlement kept sliding lower following the global market trend. The contract was last trading 0.8% lower at Rs 3,537 per barrel after having spent the session between Rs 3,561 and Rs 3,524.
MCX Gold for August settlement contract treaded marginally lower at Rs 18,676 after having spent the session between Rs 18,697 and Rs 18,595 per 10 grams. MCX Silver July settlement contract was trading 0.5% lower at Rs 29,136 per kg, after having opened the session at Rs 29,300.
Base metals were quoting higher despite mixed cues from the overseas markets. MCX copper for June settlement was up 0.4% at Rs 303.60 per kg – its straight second session gain. However, the counter has trimmed some of its gains tracking softer equities. MCX zinc June contract added 1.3% to trade at Rs 84.40 per kg.
