Bloomberg News

Oil Falls on Weak Unemployment Information: Commodities at Close

June 28, 2012

The Standard & Poor’s GSCI gauge of 24 commodities fell 1.7 percent to 567.47 at 5 p.m. New York time as oil tumbled to an eight-month low on weak unemployment data from the U.S. and Germany.

The UBS Bloomberg CMCI index of 26 raw materials fell 1.1 percent to 1,427.922.

CRUDE OIL

Oil fell to an eight-month low as unemployment data from the U.S. and Germany spurred concern about the economic recovery as European Union leaders met to address the debt crisis.

Prices dropped 3.1 percent after the Labor Department reported U.S. applications for unemployment benefits hovered near the highest level of 2012 last week and the prior reading was revised up. German unemployment rose more than economists forecast in June. Oil also fell as the Supreme Court upheld the core of President Barack Obama’s health-care overhaul.

Crude for August delivery declined $2.52, or 3.1 percent, to $77.69 a barrel on the New York Mercantile Exchange, the lowest settlement since October.

Brent oil for August settlement decreased $2.14, or 2.3 percent, to $91.36 a barrel on the London-based ICE Futures Europe exchange.

OIL PRODUCTS

Heating oil slid on concern that U.S. economic growth is stalled and that European leaders won’t reach a consensus on how to contain the region’s debt crisis, which is threatening the global recovery and fuel demand.

Futures fell as the U.S. economy grew 1.9 percent in the first quarter, less than the 3 percent gain the prior quarter, Commerce Department figures showed. First-time jobless claims fell 6,000 to 386,000 last week, hovering near the highest level of the year, the Labor Department reported. European leaders are meeting at an economic summit in Brussels today.

Heating oil for July delivery fell 4.18 cents, or 1.6 percent, to settle at $2.5519 a gallon on the Nymex. The more actively traded August contract declined 4.3 cents to $2.5472.

July-delivery gasoline lost 0.62 cent to settle at $2.6142 a gallon. The August contract retreated 2.16 cents, or 0.9 percent, to $2.4773.

NATURAL GAS

Natural gas futures dropped for the first time in six days after a government report showed that U.S. stockpiles rose more than forecast last week.

Gas fell 2.7 percent after the Energy Department said supplies expanded by 57 billion cubic feet to 3.063 trillion. Analyst estimates compiled by Bloomberg showed an expected increase of 53 billion. Gas rose to a five-month high yesterday as hot weather boosted fuel demand from power plants.

Natural gas for August delivery slid 7.6 cents to $2.722 per million British thermal units on the Nymex.

BASE METALS

Copper fell the most in a week as unemployment rose in Germany, fueling concern that a worsening debt crisis for the euro-currency bloc will undercut demand for the metal.

The number of people out of work in Germany, the world’s third-biggest copper consumer, rose by a seasonally adjusted 7,000 to 2.88 million, topping the estimate of economists in a Bloomberg survey.

Copper futures for September delivery declined 0.7 percent to settle at $3.3315 a pound on the Comex in New York.

Aluminum, nickel and tin declined on the London Mercantile Exchange, while zinc and lead advanced.

PRECIOUS METALS

Gold fell to the lowest level in almost four weeks amid signs of slowing U.S. growth and as the dollar gained on speculation that European Union leaders will struggle to solve the debt crisis. Silver slumped to the cheapest in 19 months.

The number of applications for U.S. unemployment benefits hovered last week near the highest level of the year, the Labor Department said. EU leaders meet today and tomorrow for the 19th summit on battling the fiscal turmoil. This quarter, gold has dropped 7.3 percent, heading for the biggest decline in eight years, while the dollar has gained 4.9 percent against a basket of six currencies.

Gold futures for August delivery dropped 1.8 percent to settle at $1,550.40 an ounce on the Comex.

Silver futures for September delivery slumped 2.6 percent to $26.291 an ounce on the Comex, after touching $26.105, the lowest level since Nov. 18, 2010.

On the Nymex, platinum futures for October delivery dropped 1.7 percent to $1,389.30 an ounce, after earlier sliding to $1,386.70, the lowest price this year. Palladium futures for September delivery slumped 2.7 percent to $563.90 an ounce, falling the most since May 23.

SOFT MARKETS

Cotton futures rose the most in a week on speculation that acreage will decline this year in the U.S., the world’s top exporter, while hot weather threatened crop prospects in Texas, the nation’s biggest grower. Orange juice also gained, while sugar, coffee and cocoa dropped.

Cotton regions in Texas will have dry weather during the next two weeks with temperatures as much as 2 degrees Fahrenheit above normal, according to Bethesda, Maryland-based Commodity Weather Group. U.S. farmers probably cut the planted area by 14 percent, and turned to more profitable crops, such as soybeans, after prices for the fiber sank 43 percent in the past year, a Bloomberg survey showed.

Cotton for December delivery climbed 2.3 percent to settle at 69.51 cents a pound on ICE Futures U.S. in New York, the biggest gain for a most-active contract since June 19. The commodity has tumbled 26 percent since the end of March, heading for the biggest quarterly drop in a year.

Orange-juice futures for September delivery climbed 0.7 percent to $1.1425 a pound on ICE. This quarter, the price has plunged 31 percent, heading for a record slump.

Raw sugar for October delivery dropped 2 percent to settle at 20.53 cents a pound on ICE.

Arabica-coffee futures for September delivery declined 1.1 percent to $1.6305 a pound on ICE.

Cocoa futures for September delivery slid 0.1 percent to $2,230 a metric ton in New York, the first loss in three days.

LIVESTOCK

Hog prices marked the biggest two-day gain since 2009 on speculation that hot weather will restrict movement of animals, limiting the amount available to slaughterhouses. Cattle also rose.

Temperatures in the U.S. Midwest may top 100 degrees Fahrenheit (38 degrees Celsius) today, AccuWeather Inc. said. Farmers will keep hogs indoors and not move them to prevent illness and weight loss during unusually hot weather, Dennis Smith, a senior account executive at Archer Financial Services Inc., said by telephone.

Hog futures for August settlement surged 2.4 percent to settle at 93.9 cents a pound on the Chicago Mercantile Exchange. The price gained 5.5 percent in two sessions, the most since Oct. 8, 2009.

Cattle futures for August delivery advanced 1.8 percent to $1.19325 a pound in Chicago, the biggest gain since May 3.

GRAINS, OILSEEDS

Corn futures fell for the first time in a week and soybeans dropped for the third straight day after weather forecasts showed more rain will fall in parts of the U.S. Midwest, improving prospects for crops.

Some fields from eastern South Dakota to Ohio, including much of Iowa, the biggest state producer of both crops, will get as much as 2 inches (5 centimeters) of rain in the next five days, according to the National Weather Service. A cold front moving south out of Canada will bring heavier rain farther south than expected, Dave Tolleris, the president of WXRisk.com in Richmond, Virginia, said in a report.

Corn futures for December delivery fell 0.1 percent, to close at $6.3225 a bushel on the Chicago Board of Trade.

Soybean futures for November delivery fell 0.6 cent to $14.035 a bushel. The oilseed dropped 0.9 percent the past two days.

Wheat futures for September delivery fell 0.7 percent to settle at $7.46 a bushel on the CBOT. The price has jumped 16 percent this month on speculation that demand will rise as corn prices rally.

To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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