Crude oil holds sharp gains after U.S. supply data

Crude oil futures held on to strong gains during U.S. morning trade on Thursday, after a U.S. government report showed oil supplies fell significantly last week. Prices were also higher after European Central Bank President Mario Draghi unveiled details of the banks bond purchasing program earlier in the day, aimed at easing the debt crisis in the region. On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD97.34 a barrel during U.S. morning trade, rallying 2.1%. Earlier in the day, prices rose by as much as 2.35% to trade at a session high of USD97.71 a barrel, the strongest level since August 27. The U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 7.4 million barrels in the week ended August 31, compared to expectations for a decline of 5.3 million barrels. Total U.S. crude oil inventories stood at 357.1 million barrels as of last week. Total motor gasoline inventories decreased by 2.3 million barrels, compared to expectations for a decline of 3.4 million barrels. Oil prices were higher ahead of the data after ECB President Draghi said the central bank would launch an "outright monetary transaction", or OMT, program in the secondary market, which he said will provide "a fully effective backstop" against market volatility. Draghi said "strict and effective conditionality” was an essential element of the plan, under which the ECB would buy unlimited amounts of bonds of up to three years in maturity. The ECB will decide on when bond purchases will start and how long they will continue after a “full assessment”. The comments came after the central bank left its key lending rate unchanged at a record-low of 0.75%. Oil prices found further support after payroll processing firm ADP said U.S. non-farm private employment rose by a seasonally adjusted 201,000 in August, easily surpassing expectations for an increase of 140,000. The previous month’s figure was revised up to a gain of 173,000 from a previously reported increase of 163,000. A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell by a more-than-expected 12,000 to a seasonally adjusted 365,000, compared to expectations for a decline of 7,000 to 370,000. Also Thursday, the U.S. Institute of Supply Management said that service sector activity in the U.S. grew at a faster rate than expected in August, hitting the highest level since May. Market players now looked ahead to Friday’s crucial report on non-farm payrolls, which will allow investors to further gauge the strength of the labor market and the need for additional easing by the Federal Reserve. The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand. Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery rose 1.5% to trade at USD114.78 a barrel, with the spread between the Brent and crude contracts standing at USD17.44 a barrel.

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Natural gas futures fluctuate in choppy trade after U.S. supply data

Natural gas futures fluctuated in choppy trade during U.S. morning hours on Thursday, after a report from the U.S. Energy Information Administration showed U.S. gas supplies rose less-than-expected last week. On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD2.792 per million British thermal units during U.S. morning trade, easing down 0.1%. The October contract traded at USD2.823 prior to the release of the U.S. Energy Information Administration report. Prices initially jumped to the highest levels of the session following the EIA data, before turning lower in choppy trade. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended August 31 rose by 28 billion cubic feet, below market expectations for an increase of 36 billion cubic feet. Inventories rose by 62 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 60 billion cubic feet, according to U.S. Energy Department data. Total U.S. natural gas storage stood at 3.402 trillion cubic feet as of last week. Stocks were 395 billion cubic feet higher than last year at this time and 329 billion cubic feet above the five-year average of 3.073 trillion cubic feet for this time of year. Inventory didn't top the 3.3-trillion cubic feet level in 2011 until the end of September, with stocks peaking at a record 3.852 trillion cubic feet in November of last year. The report showed that in the East Region, stocks were 93 billion cubic feet above the five-year average, following a net injection of 34 billion cubic feet. Stocks in the Producing Region were 174 billion cubic feet above the five-year average of 943 billion cubic feet, after a net withdrawal of 7 billion cubic feet. Market analysts have warned that without strong late-summer and early-autumn cooling demand, gas inventories will reach the limits of available capacity later this year. The storage surplus to last year will have to be cut by at least another 150 billion cubic feet in the 13 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity. Natural gas traders continued to focus on updated weather forecasts to gauge the strength of early-Autumn cooling demand. The National Weather Service's six- to 10-day outlook published Wednesday predicted mostly normal temperatures across the Northeast and Midwest and below-normal readings in the Southeast and along the West Coast. Demand for natural gas tends to fluctuate in late-summer and early-autumn based on hot weather and air conditioning use. A bout of extreme heat across much of the U.S. over the past two months helped boost natural gas prices above the key USD3.00-level in late-July. Prices rallied to a 2012 high of USD3.275 per million British thermal units on July 31. But futures have come under heavy selling pressure since the start of August, losing almost 17% after extended weather forecasts pointed to milder weather across most parts of the U.S. Elsewhere on the NYMEX, light sweet crude oil futures for delivery in October rallied 2% to trade at USD97.27 a barrel, while heating oil for October delivery added 1.3% to trade at USD3.158 per gallon.

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Crude oil rallies 2% on ECB bond plan, U.S. supply data eyed

Crude oil futures shot higher during U.S. morning hours on Thursday, climbing to the highest levels of the session after European Central Bank President Mario Draghi unveiled details of the banks bond purchasing program, aimed at easing the debt crisis in the region. Oil traders were also focusing on closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day. On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD97.28 a barrel during U.S. morning trade, rallying 2%. Earlier in the day, prices rose by as much as 2.2% to trade at a session high of USD97.52 a barrel, the strongest level since August 27. Oil prices extended strong gains after ECB President Draghi said the central bank would launch an "outright monetary transaction", or OMT, program in the secondary market, which he said will provide "a fully effective backstop" against market volatility. Draghi said "strict and effective conditionality” was an essential element of the plan, under which the ECB would buy unlimited amounts of bonds of up to three years in maturity. The ECB will decide on when bond purchases will start and how long they will continue after a “full assessment”. The comments came after the central bank left its key lending rate unchanged at a record-low of 0.75%. Oil prices found further support after payroll processing firm ADP said U.S. non-farm private employment rose by a seasonally adjusted 201,000 in August, easily surpassing expectations for an increase of 140,000. The previous month’s figure was revised up to a gain of 173,000 from a previously reported increase of 163,000. A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell by a more-than-expected 12,000 to a seasonally adjusted 365,000, compared to expectations for a decline of 7,000 to 370,000. Also Thursday, the U.S. Institute of Supply Management said that service sector activity in the U.S. grew at a faster rate than expected in August, hitting the highest level since May. Market players now looked ahead to Friday’s crucial report on non-farm payrolls, which will allow investors to further gauge the strength of the labor market and the need for additional easing by the Federal Reserve. Meanwhile, oil traders were looking ahead to weekly data from the U.S. government on oil supplies later in the day to gauge the strength of demand from the world’s largest oil consumer. The report was expected to show that U.S. crude oil stockpiles declined by 5.3 million barrels last week, as Hurricane Isaac shut offshore platforms in the Gulf of Mexico. After markets closed Wednesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 7.2 million barrels last week to hit the lowest level in five months. The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand. Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery rose 1.4% to trade at USD114.67 a barrel, with the spread between the Brent and crude contracts standing at USD17.38 a barrel.

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Gold off the highs after Draghi comments, strong U.S. jobs data

Gold futures came off the highest levels of the session during U.S. morning trade on Thursday, after comments from European Central Bank President Mario Draghi and following strong U.S. jobs data, which dampened expectations for near-term easing by the Federal Reserve. On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,700.95 a troy ounce during U.S. morning trade, adding 0.55%. Prices rose by as much as 1.25% earlier in the day to hit a session high of USD1,713.35 a troy ounce, the strongest level since March 12. Gold futures were likely to find support at USD1,646.45 a troy ounce, the low from August 31 and near-term resistance at USD1,725.15, the high from March 2. Gold prices came off the highs after ECB President Draghi said the bank would launch an "outright monetary transaction" plan and said the region's rescue funds should be ready to act in bond markets. The comments came after the central bank left its key lending rate unchanged at a trecord-low of 0.75%. Prices came under additional pressure after payroll processing firm ADP said U.S. non-farm private employment rose by a seasonally adjusted 201,000 in August, easily surpassing expectations for an increase of 140,000. The previous month’s figure was revised up to a gain of 173,000 from a previously reported increase of 163,000. A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell by a more-than-expected 12,000 to a seasonally adjusted 365,000, compared to expectations for a decline of 7,000 to 370,000. Gold traders now looked ahead to Friday’s crucial report on non-farm payrolls, which will allow investors to further gauge the strength of the labor market and the need for additional easing by the Federal Reserve. Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system. Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases. However, prices have lost almost 5% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal's hedge, the greenback. Elsewhere on the Comex, silver for December delivery jumped 1.1% to trade at USD32.67 a troy ounce, while copper for December delivery fell 0.65% to trade at USD3.506 a pound.

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Copper futures hover below 6-week high ahead of ECB decision

Copper futures were little changed near the previous session’s six-week high during European morning hours on Thursday, as investors awaited the outcome of the European Central Bank’s upcoming policy meeting, amid hopes for fresh measures to stem the debt crisis in the euro zone. On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.520 a pound during European morning trade, shedding 0.25%. Prices were stuck in a tight trading range of USD3.501 a pound, the daily low and a session high of USD3.530 a pound. Prices rose to a six-week high of USD3.534 a pound on Wednesday. Markets were eyeing the ECB’s monetary policy meeting later Thursday, at which President Mario Draghi was expected to announce details of measures to help stabilize the region’s sovereign debt markets. Bloomberg reported on Wednesday that the ECB is planning "unlimited, sterilized" bond buying plan, without setting bond yield targets. The plan is reported to be focused on government bonds with maturities of up to three years. Analysts warned that sentiment was set to remain vulnerable however, amid fears that the central bank may disappoint. Market participants were also focusing on Friday’s crucial U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market and the need for additional easing by the Federal Reserve. A disappointing jobs report could influence the Fed’s decision at its next policy meeting starting on September 12. Mounting speculation the Federal Reserve was moving closer to introducing fresh measures to stimulate growth in the U.S. economy has helped support market sentiment in recent sessions. Copper prices came under pressure as ongoing concerns over a deeper-than-expected slowdown in China’s economy weighed on future demand prospects. Wall Street investment bank Goldman Sachs lowered its 2012 growth forecast for China’s economy to 7.6%, down from a previous estimate of 7.9%. Chinese inflation and industrial production data are due on Sunday, while trade numbers will be released next Monday, which may give a clearer picture of the state of the Chinese economy. China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. Elsewhere on the Comex, gold for October delivery rallied 1.1% to trade at a six-month high of USD1,710.55 a troy ounce, while silver for December delivery surged 1.95% to trade at USD32.96 a troy ounce, the highest since April 3.

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