Oil retreats in Asia after cliff deal, mixed U.S. data

After surging 1.19% to settle at at USD92.91 a barrel during Wednesday’s U.S. session, oil futures drifted lower in the early part of Thursday’s Asian session as traders may have been focusing more some mixed data points out of the U.S. rather than fiscal cliff-related ebullience. 

On the New York Mercantile Exchange, light, sweet crude futures for February delivery slipped 0.43% to USD92.72 per barrel in Asian trading Thursday. Oil’s decline may also be a sign that futures, which were flirting with three-month highs after the U.S. session, rose too much too rapidly and that traders are looking to lock in some profits. 

Gold, silver oil and other riskier assets jumped during Wednesday’s U.S. session, buoyed by positive fiscal cliff news. On Tuesday night, the U.S. House of Representatives ratified a fiscal cliff bill previously approved by the Senate that will raise taxes on American households earning over USD450,000 per year. Those taxes increases are designed to increase government revenue by USD620 billion over 10 years. 

However, the two U.S. data points released during the session were mixed. In U.S. economic news, the Institute for Supply Management said its manufacturing index rose to 50.7 in December from 49.5 in November. Readings above 50 signal expansion. ISM's employment index rose to 52.7 from 48.4 in November. 

The Commerce Department said construction spending fell 0.3% in November. The October number was revised lower to an increase of 0.7% from an initial reading of growth of 1.4%. The November decline is the first since March 2012. 

Oil traders will now turn their attention to the U.S. weekly jobless claims report due out later today and the December non-farm payroll report due to be delivered by the Labor Department on Friday. 

Elsewhere, Brent futures for February deliver fell 0.18% to USD111.19 per barrel on the ICE Futures Exchange.- INVESTING.COM

Natural gas extends losses as forecasts point to warming temps ahead

Natural gas futures extended Monday's losses into Wednesday after weather services continued to forecast warmer temperatures for much of the U.S.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.232 per million British thermal units, down 3.57%.

Earlier this week, weather service provider MDA Weather said that it expected temperatures to warm up in the coming days through the second week of January.

Elsewhere, Commodity Weather Group in Bethesda, Maryland, reported that cooler temperatures across most of the mainland U.S. will thaw and yield to above-normal temperatures from Jan. 7 through Jan. 11, which sent natural gas prices plummeting. 

Natural gas futures are very sensitive to weather reports in the U.S. winter.

The U.S. heating season running from November through March sees peak demand for gas.

About half of U.S. households use gas for heating purposes, according to Energy Department data.

Meanwhile, U.S. natural gas storage fell less than expected in the week before last, official data revealed on Friday, though weather forecasts served as the market's chief weather vane.

In a report, the Energy Information Administration said that U.S. natural gas storage fell by 72 billion cubic feet last week to 3.652 trillion cubic feet, less than a decline of 82 billion cubic feet in the preceding week. 

Analysts had expected U.S. natural gas storage to fall 76 billion cubic feet last week, though markets focused more on weather forecasts

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February were up 1.24% and trading at USD92.96 a barrel, while heating oil for February delivery were up 0.69% and trading at USD3.0526 per gallon.

Oil Drops From Highest in Three Months on Signs Gains Excessive

Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive.

Futures lost as much as 0.7 percent after rallying 2.6 percent in the past two days as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that threatened growth in the world’s biggest oil-consuming country. Crude declined today as technical indicators showed futures may have risen too quickly for further gains to be sustainable, according to data compiled by Bloomberg.

“We’re getting a mild sell signal and the coincidence of those levels mean that some traders will be bailing out,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we’re seeing is longs closing out, taking some profit.”

West Texas Intermediate for February delivery dropped as much as 63 cents to $92.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.82 at 12:54 p.m. in Singapore. The contract yesterday climbed 1.4 percent to $93.12 a barrel, the highest settlement since Sept. 18. The volume was 37 percent below the 100-day average for the time of day.

Brent oil for February settlement on the London-based ICE Futures Europe exchange fell as much as 65 cents, or 0.6 percent, to $111.82 a barrel. Prices advanced 3.5 percent in 2012, a fourth annual gain. The number of contracts changing hands was 26 percent less than the 100-day average.

New York crude yesterday settled higher than the 30-day upper Bollinger Band for the fourth time in a week, signaling the market is overbought, according to data compiled by Bloomberg. Prices decreased in mid-September after closing above the same indicator, about $92.48 a barrel today. -BLOOMBERG

Gold set to shine even more brightly in 2013

Gold proved a good place to store wealth in 2012 and so it could be again in 2013.

Over the last 12 months the precious metal has gained around 6% in value to $1,674 an ounce, driven by investors looking for safe havens from the eurozone, more quantitative easing from the US Federal Reserve, demand from central banks, and supply issues especially in South Africa.

A raft of commentators, brokers and industry participants predict it will climb higher, topping $2,000 and even rising as high as $2,500 by the close of 2013.

That looked a near-certainty in November when the Fed unleashed a third round of QE, a move that sent the gold price close to $1,800.

The mood has cooled since then, even though for the gold bulls the scenarios that drove the price higher in 2012 remain more or less intact.

Chief among these is the prospect of continued or even more QE in 2013 if the tentative US recovery seems in danger of stalling.

This is, runs the theory, likely to undermine the US dollar, traditionally something that moves in the opposite direction to the gold price.

Central banks have also been increasing gold reserves, especially in emerging market countries due to concerns over paper currencies.

The official sector has now been a net buyer of gold each year since 2009, as developed economies’ central banks have sold increasingly small quantities of gold.

Gold is also likely to be classified a top-tier bank asset, meaning commercial banks would be able to lend against 100% of their gold holdings rather than 50%.

And perhaps most importantly, there has been the growth of physically-backed exchange-traded funds, which track gold prices.

In the third quarter of 2012, global ETF holdings increased by 189 tonnes, a 56% jump year-on-year, with holdings at record levels in the SPDR Gold Trust.

But despite the conviction of bullish investors, December saw a perceptible mood change. Uncertainty sparked by the US fiscal cliff had an impact, but also a nagging doubt that the American economy may be doing better than expected may also be to blame.

Unemployment has fallen sharply and the US Fed has tied its QE programme to US job creation. Some whisper, albeit quietly, that even the eurozone may be over the worst.

None of this has yet meant too many changes in gold price forecasts, which range between a cautious $1,800 and an ultra-bullish $2,500 in 2013, but perhaps they are now written in heavy lead instead of ink.

Silver played its usual role as gold’s understudy in the early part of last year but recently has been outstripping its more expensive cousin.

A recent survey by Bloomberg suggested this might continue as it came up with a median price of $40.25 an ounce next year, a 30% rise.

It put the surge in price down to a combination of little new supply coming on stream and improving industrial demand. 

Platinum has been dominated by the industrial unrest in South Africa, which slashed production by 640,000 ounces during the year. The upshot was to eliminate a surplus overhang of the white metal and push prices higher.

Brokers expect more unrest in the current year especially when Anglo American publishes a review of its Amplats division, which may recommend mine closures. 

Morgan Stanley predicts the platinum price will average $1,715 in 2013, up from $1,538 in 2012.
Courtesy: This Is Money