Global Recap – 13th Jan, 09

Crude oil jumped after Saudi Arabia said it had removed 1.7 million barrels per day (bpd) of oil from the world market since last summer. The moves followed comments by Saudi Arabian Oil Minister Ali al-Naimi that the kingdom would pump below its OPEC production target of 8.05 million bpd in February. The market was also supported by a blast of cold winter weather in the northern hemisphere. Reuter's poll ahead of Wednesday's U.S. inventory report forecast crude stocks rose by 2.2 million barrels for the week, the third weekly gain. The spread between Brent and U.S. crude has widened sharply as high inventory levels pressure the U.S. benchmark.

U.S. Energy Information Administration revised downward its global energy demand projections for this year due to the economic crisis, but forecast a slight recovery in 2010. The EIA forecast world oil demand will drop by 810,000 barrels per day in 2009, compared with last year, down 200,000 bpd from its estimate in December. The EIA said it expected demand in the United States, the world's top consumer, to fall by 390,000 bpd in 2009, compared with 2008. The EIA's is the first of three key petroleum demand forecasts to be released this week and provided the U.S. agency's first estimate for oil demand in 2010. The global economic crisis has damped global oil consumption, helping to send crude oil prices from record highs above $147 a barrel in July to below $40 a barrel currently.

Gold rebounded after the previous session's 4% drop helped by stronger crude oil and as bullion found chartbased support in spite of a dollar rally against the Euro. Gold largely followed a rising crude market, as consolidation seen as prices held support at $814 an ounce. Gold held firm even as the dollar extended gains versus Euro on the threat of ratings downgrades to some Euro-zone countries. Euro broke below $1.32 against the dollar. Gold market in the longer term could be pressured by weak physical demand, easing in credit market tightness and a disinflationary environment.

Copper tumbled by 4% on demand concerns from key consumer China before turning higher after U.S. markets opened and funds bought oil and other commodities. Copper was down on concerns China's State Reserve Bureau (SRB) was in no hurry to buy copper and this dragged lead down by 8.5% and nickel shed 5.1%. Copper stocks in LME warehouses surged 5,350 tonnes to a five-year high of 374,850. To stem the drop in prices and meet falling demand environment producers across the world were cutting production. Chinese copper imports jumped 32% in December from the month earlier, but the market focused on the 5.1% drop in 2008 from the previous year as the slowing global economy hit China's growth. Weaker demand has seen inventories rise.

Courtesy: Religare Commodities