Investors took profit from their long positions in commodities ahead of US' employment report. Crude oil for September delivery lost -0.04% to 71.94. Heating oil slid -1% to close at 1.97 while gasoline gained +0.5% to 2.06. Natural gas plunged -7.4% to settle at 3.74 as inventory rose more than anticipated last week.
The US Labor Department will probably report a -345K decline in non-farm payrolls in July after falling -467K in the prior month. Although the pace of contraction has been slowed down, unemployment rate should have risen to 9.6% from 9.5% in June. Employment is an important factor affecting consumption which contributes about 60% of the nation's GDP.
Oil price also declined after the US Federal Trade Commission announced a set of rules, effective November 4, 2009, aimed at curbing manipulation of oil markets. The Rule targets 'market manipulation in connection with the purchase or sale of crude oil, gasoline or petroleum distillates at wholesale, and the reporting of false or misleading information related to the whole sale price of these products'. According to the press release, anyone violation the Rule faces civil penalties of up to $1M per violation per day, in addition to any relief available to the Commission under the FTC Act.
Stock markets retreated with Dow Jones Industrial Average losing -0.27% to 9256 and S&P 500 Index slipping -0.56% to 997.
Today in Asia, the MSCI Asia Pacific Index drops -1.1%. In Japan, the Nikkei 225 Stock Average loses -1% to 10284 as Konica Minolta slumps by -10% as its first quarter profit dropped -98%.Other regional indices also trade low on valuation concerns.
Natural gas storage rose 66 bcf, compared with consensus of a gain of 61 bcf, in the week ended July 31 to 3089 bcf. Stockpiles were 19% higher than 5-year average. The benchmark contract of natural gas plunged -7.4%, the most in 2 months. However, the gauge will probably gain +3% on weekly basis as driven by broad-based rally in commodity markets and closure of a pipeline in the Gulf of Mexico.
USD recovered after being pressured for almost a week. Against the euro, it rose +0.4% to 1.435. Against the pound, the greenback surged to 1.67 after sinking to 10-month low of 1.7 Wednesday. The unexpected extension of BOE's asset purchase program to 175B pound caught the market in surprise. This indicated that policymakers anticipated the UK's recession would be deeper than previously projected.
Gold fell-0.4% to 962.9 while silver slid -0.8% to 14.65 on USD's recovery. PGMs got hammered even more severely. Platinum dropped -2.3% to 1263.4 while palladium lost -2.9% to 271.1.
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