Bloomberg News

Commodities Drop on China as U.S. Crude Supply Reaches a Record

May 01, 2013

Commodities dropped for a second day, led by metals and oil, amid signs of an economic slowdown in China and after a government report showed American crude supplies surged to a record.

The Standard & Poor’s GSCI Spot Index of 24 raw materials fell as much as 2.6 percent to 608.08. It traded at 611.20 at 1:23 p.m. in New York. The GSCI touched 596.36 on April 18, the lowest level since July 2. West Texas Intermediate crude, gasoline, silver and copper tumbled more than 3 percent each, while Brent and heating oil decreased more than 2 percent.

Commodities measured by the S&P GSCI declined after Chinese manufacturing grew at a weaker pace in April. U.S. companies added fewer workers than forecast in an ADP Research Institute report. The U.S. Labor Department will publish April payrolls data May 3. The selloff accelerated as the government reported that U.S. crude supplies rose to 395.3 million barrels in the seven days to April 26, the most in weekly data going back to 1982. They were last at this level in 1931 using monthly data.

“The data is building a very negative picture for commodities,” said John Kilduff, a partner at Again Capital LLC, a New York energy hedge fund. “First there were the Chinese figures overnight that show a slowdown and the ADP numbers, which are a warning shot about what Friday’s jobs report will show. The large build in crude-oil inventories broke the back of the recent commodity rally.”

West Texas Intermediate crude for June delivery decreased as much as $3.35, or 3.6 percent, to $90.11 a barrel on the New York Mercantile Exchange. The contract was down 2.9 percent at $90.86 at 1:23 p.m. Brent oil for June settlement dropped as much as $3.61, or 3.5 percent, to $98.76 a barrel on the London- based ICE Futures Europe exchange.

Jeopardized Market

“We were looking for WTI to possibly test $98-or-$100 until these builds,” Kilduff said. “The $90 level is now in jeopardy and we could soon be trading in the low $80s.”

U.S. crude stockpiles rose 6.7 million barrels last week, the U.S. Energy Information Administration, the Energy Department’s statistical arm, reported today. Analysts surveyed by Bloomberg expected a gain of 1.1 million.

Gasoline for June delivery slipped 8.48 cents, or 3 percent, to $2.7172 a gallon at 1:24 p.m. on the Nymex, and is heading for the biggest decline since April 3. Heating oil for June delivery dropped 5.44 cents, or 1.9 percent, to $2.7852 a gallon in New York.

Silver futures for July delivery were down 3.5 percent to $23.345 an ounce on the Comex in New York. Prices slumped 15 percent last month, the most since December 2011.

Gold for June delivery retreated 1.8 percent to $1,445.80 an ounce on the Comex and is heading for the biggest drop since April 15, when prices slumped the most in 33 years.

Copper futures for delivery in July declined 3.5 percent to $3.075 a pound on the Comex.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

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


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