Bloomberg News

Commodities Fall to Three-Month Low as Oil Drops

April 03, 2013

Commodities Tumble as Crude Drops on U.S. Inventories Report

In other commodities, wheat surged on concern that frost is hurting winter crops in the Great Plains and wet, cold weather will delay spring planting in North America. Photographer: Daniel Acker/Bloomberg

Commodities fell to the lowest level in more than three months as crude dropped after data showed U.S. oil stockpiles climbed to a 22-year high.

The Standard & Poor’s GSCI Index of 24 raw materials declined 2 percent to 638.67, the lowest close since Dec. 24.

Crude and gasoline led the slide after the Energy Information Administration said oil supplies rose 2.71 million barrels to 388.6 million last week, the highest level since 1990. Commodities also fell as U.S. reports indicated the economy is starting to cool.

“Fundamentals have been bearish for crude,” said Bill Baruch, a senior market strategist at commodities trading firm Iitrader.com in Chicago. “We have some economic reports that are pretty disappointing.”

West Texas Intermediate oil for May delivery fell $2.74, or 2.8 percent, to $94.45 a barrel on the New York Mercantile Exchange, the lowest settlement since March 22. Futures dropped the most since Nov. 20.

Brent crude for May settlement declined $3.58, or 3.2 percent, to end the session at $107.11 a barrel on the London- based ICE Futures Europe exchange. It was the lowest settlement since Dec. 7 and the biggest decline since Nov. 7.

Gasoline fell 12.68 cents, or 4.2 percent, to $2.914 a gallon on the Nymex, the lowest settlement since Feb. 27.

Crude production was unchanged near the highest level since 1992, the EIA, the Energy Department’s statistical arm, reported. Output has surged as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.

Job Growth

Commodities also slid as U.S. service industries expanded in March at the slowest pace in seven months and companies added fewer workers than forecast.

The Institute for Supply Management said its non- manufacturing gauge declined to 54.4 from a one-year high of 56. Private employment rose 158,000 last month, the smallest gain since October, according to the ADP Research Institute.

In other commodities, wheat surged on concern that frost is hurting winter crops in the Great Plains and wet, cold weather will delay spring planting in North America.

Wheat futures for delivery in May jumped 3.8 percent to $6.965 a bushel on the Chicago Board of Trade.

Arabica-coffee futures for May delivery rose 2.4 percent to $1.3945 a pound on ICE, the biggest gain since Jan. 11.

To contact the reporters on this story: Moming Zhou in New York at mzhou29@bloomberg.net;

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


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