Crude, Gold Futures Decline
Crude-oil futures fell to one-week low Monday, pressured by a stronger dollar and concerns slowing U.S. growth could hit energy demand. The fall came as traders locked in recent gains. The decline damped speculation that a big number of outstanding $100 call options, or rights to buy crude futures at that price on the New York Mercantile Exchange, would draw prices to the triple-digit level ahead of the December options contract expiring Tuesday. Prices would now need a more than $5 a barrel jump in one session to accomplish that, a move that would be very unlikely without substantial price-supportive supply and demand factors.
The front-month December light, sweet crude contract on the New York Mercantile Exchange fell $1.70, or 1.8%, to $94.62 a barrel, the lowest settlement for a front month contract since Nov. 5. Brent crude on the ICE futures exchange fell $1.48 to $91.70 a barrel. Final settlement prices for Brent weren't yet available.
Prices fell as low as $93.54 a barrel in intrday trading but made back some losses after Saudi Arabian Oil Minister Ali Naimi told Dow Jones Newswires there will be no output boost this weekend when OPEC heads of state meet in Saudi Arabia. Mr. Naimi dismissed earlier talk by an OPEC official that Saudi Arabia, OPEC's de facto leader, is pushing for a 500,000 barrels-a-day increase in output if prices drive toward $100. The cartel won't discuss production until its Dec. 5 meeting in Abu Dhabi.
"This market is maybe setting itself to turn over" and start heading lower, said Eric Wittenauer, an analyst at A.G. Edwards in St Louis. "The options, and the realization we can't hit $100 before expiration, weighed on prices, as did U.S. and global economic worries and a strong day for the dollar."
Weak demand for U.S. refined products such as gasoline and heating oil in recent weekly government reports are weighing on prices and could portend further losses, Wittenauer said.
The euro was recently at $1.456, from $1.4676 late Friday as investors sought shelter in the greenback after an overnight drop in Asian stock markets. Recent U.S. dollar weakness has played a big part in crude's recent advance, making futures less expensive to traders with other currencies and blunting any negative demand effect in other countries.
Crude oil's inability to stay above $95 a barrel and the increased likelihood that $100 call options will finish out of the money are leading many to suggest that the contract's intraday record of $98.62 a barrel, hit Nov. 7, will stand, at least in the short term.
"The market may now have to wait until next year for its attempt at $100 a barrel," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Traders will now turn to the International Energy Agency's monthly supply and demand figures and projections, due Tuesday morning, for further evidence to justify crude levels near record highs. They will also focus on U.S. inventory data due Thursday from the Department of Energy. The data is delayed a day because of the U.S. Veterans Day holiday Monday.
Analysts are expecting the DOE to say that inventories of both crude oil and distillates, which include heating oil and diesel fuel, fell by 300,000 barrels last week and that gasoline stockpiles fell by 100,000 barrels, according to the mean survey in a Dow Jones Newswires survey of analysts. Refinery use is seen growing by 0.7 percentage point to 86.9% of capacity.
Front-month December reformulated gasoline blendstock, or RBOB, fell 3.95 cents, or 1.6%, to $2.4165 a gallon. December heating oil fell 3.67 cents, or 1.4%, to $2.5821 a gallon.
Gold Futures Plunge
Precious metals fell Monday as lower crude oil prices and a stronger U.S. dollar sparked profit taking from gold to palladium, analysts said. Comex gold ended down more than 3.2%, Nymex platinum more than 2.4% and New York palladium more than 1%. Silver had the largest percentage decline of the main precious metals traded in New York, off more than 5%.
December gold fell $27 to $807.70 an ounce after breaking through the $800 level to hit a session low of $798.80 on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the December contract at the Chicago Board of Trade was down $26.80 to $807.80.
"The market has really come a long way; it's time to take some profits," said Frank Lesh, broker and futures analyst with Future Path Trading. "There weren't any buyers at the $840s. At these levels up here you have to expect this kind of volatility and these kinds of moves."
The profit taking in gold came after a "strong spec-led runup" in prices was put to a halt Monday by a rising dollar and lower oil, said Michael Gross, broker and futures analyst with Liberty Trading.
As gold was closing, the dollar was up more than 0.8% on an ICE Futures U.S. index that tracks the greenback against a basket of other currencies. Nymex December crude was down $1.51 at $94.81 a barrel.
The very soft close in gold and silver could portend the start of a deeper correction, a floor source said. "We view this retreat by gold as a technical reaction to the advances last week," a Commerzbank research note said. "Market players increasingly fear a strong correction once supporting factors, such as the galloping oil market and the weak U.S. dollar, start to wane."
However, Commerzbank said: "We remain very positive about gold medium term and are convinced that the all-time record from 1980 will be broken in the coming months."
Comex December silver fell 78.3 cents to $14.762 an ounce. As it was closing, CBOT December silver was down 78.2 cents to $14.771.
"Silver (tracked) gold . with a poor night in Asia followed by strong selling on Comex," a BNP Paribas research note said.
Meanwhile, platinum and palladium futures fell as Friday's profit taking continued Monday amid falling oil and gold and a higher dollar, a trader said. "Spec investments taking their chunk out of the market while they still can," the trader said. January platinum fell $35.20 to $1,390.80 an ounce, while December palladium declined $4 to $372.25 an ounce.
"Platinum largely ignored a contract miners strike in South Africa and instead focused on the lower gold," the BNP Paribas research note said. "Palladium faired relatively well. The fact that its rise in recent weeks has been limited appears to have spared it from sharper losses."
More than 10,000 contracted mine workers have gone on strike at a number of mines in South Africa, including those of the world's two largest platinum producers, Anglo Platinum Ltd. and Impala Platinum Holdings Ltd.
The front-month December light, sweet crude contract on the New York Mercantile Exchange fell $1.70, or 1.8%, to $94.62 a barrel, the lowest settlement for a front month contract since Nov. 5. Brent crude on the ICE futures exchange fell $1.48 to $91.70 a barrel. Final settlement prices for Brent weren't yet available.
Prices fell as low as $93.54 a barrel in intrday trading but made back some losses after Saudi Arabian Oil Minister Ali Naimi told Dow Jones Newswires there will be no output boost this weekend when OPEC heads of state meet in Saudi Arabia. Mr. Naimi dismissed earlier talk by an OPEC official that Saudi Arabia, OPEC's de facto leader, is pushing for a 500,000 barrels-a-day increase in output if prices drive toward $100. The cartel won't discuss production until its Dec. 5 meeting in Abu Dhabi.
"This market is maybe setting itself to turn over" and start heading lower, said Eric Wittenauer, an analyst at A.G. Edwards in St Louis. "The options, and the realization we can't hit $100 before expiration, weighed on prices, as did U.S. and global economic worries and a strong day for the dollar."
Weak demand for U.S. refined products such as gasoline and heating oil in recent weekly government reports are weighing on prices and could portend further losses, Wittenauer said.
The euro was recently at $1.456, from $1.4676 late Friday as investors sought shelter in the greenback after an overnight drop in Asian stock markets. Recent U.S. dollar weakness has played a big part in crude's recent advance, making futures less expensive to traders with other currencies and blunting any negative demand effect in other countries.
Crude oil's inability to stay above $95 a barrel and the increased likelihood that $100 call options will finish out of the money are leading many to suggest that the contract's intraday record of $98.62 a barrel, hit Nov. 7, will stand, at least in the short term.
"The market may now have to wait until next year for its attempt at $100 a barrel," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Traders will now turn to the International Energy Agency's monthly supply and demand figures and projections, due Tuesday morning, for further evidence to justify crude levels near record highs. They will also focus on U.S. inventory data due Thursday from the Department of Energy. The data is delayed a day because of the U.S. Veterans Day holiday Monday.
Analysts are expecting the DOE to say that inventories of both crude oil and distillates, which include heating oil and diesel fuel, fell by 300,000 barrels last week and that gasoline stockpiles fell by 100,000 barrels, according to the mean survey in a Dow Jones Newswires survey of analysts. Refinery use is seen growing by 0.7 percentage point to 86.9% of capacity.
Front-month December reformulated gasoline blendstock, or RBOB, fell 3.95 cents, or 1.6%, to $2.4165 a gallon. December heating oil fell 3.67 cents, or 1.4%, to $2.5821 a gallon.
Gold Futures Plunge
Precious metals fell Monday as lower crude oil prices and a stronger U.S. dollar sparked profit taking from gold to palladium, analysts said. Comex gold ended down more than 3.2%, Nymex platinum more than 2.4% and New York palladium more than 1%. Silver had the largest percentage decline of the main precious metals traded in New York, off more than 5%.
December gold fell $27 to $807.70 an ounce after breaking through the $800 level to hit a session low of $798.80 on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the December contract at the Chicago Board of Trade was down $26.80 to $807.80.
"The market has really come a long way; it's time to take some profits," said Frank Lesh, broker and futures analyst with Future Path Trading. "There weren't any buyers at the $840s. At these levels up here you have to expect this kind of volatility and these kinds of moves."
The profit taking in gold came after a "strong spec-led runup" in prices was put to a halt Monday by a rising dollar and lower oil, said Michael Gross, broker and futures analyst with Liberty Trading.
As gold was closing, the dollar was up more than 0.8% on an ICE Futures U.S. index that tracks the greenback against a basket of other currencies. Nymex December crude was down $1.51 at $94.81 a barrel.
The very soft close in gold and silver could portend the start of a deeper correction, a floor source said. "We view this retreat by gold as a technical reaction to the advances last week," a Commerzbank research note said. "Market players increasingly fear a strong correction once supporting factors, such as the galloping oil market and the weak U.S. dollar, start to wane."
However, Commerzbank said: "We remain very positive about gold medium term and are convinced that the all-time record from 1980 will be broken in the coming months."
Comex December silver fell 78.3 cents to $14.762 an ounce. As it was closing, CBOT December silver was down 78.2 cents to $14.771.
"Silver (tracked) gold . with a poor night in Asia followed by strong selling on Comex," a BNP Paribas research note said.
Meanwhile, platinum and palladium futures fell as Friday's profit taking continued Monday amid falling oil and gold and a higher dollar, a trader said. "Spec investments taking their chunk out of the market while they still can," the trader said. January platinum fell $35.20 to $1,390.80 an ounce, while December palladium declined $4 to $372.25 an ounce.
"Platinum largely ignored a contract miners strike in South Africa and instead focused on the lower gold," the BNP Paribas research note said. "Palladium faired relatively well. The fact that its rise in recent weeks has been limited appears to have spared it from sharper losses."
More than 10,000 contracted mine workers have gone on strike at a number of mines in South Africa, including those of the world's two largest platinum producers, Anglo Platinum Ltd. and Impala Platinum Holdings Ltd.
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