Base Metals Settle Down On Global Debt Worries: April 19, 2012

The base metals complex ended lower on the LME in yesterday’s trading session.

In the initial part of the trade, base metals traded higher due to positive growth outlook from the IMF, but strength in the US Dollar Index coupled with escalating concerns with respect to Europe’s debt crisis exerted downside pressure on metal prices in the later part of the trading session.

However, depreciation in the Indian rupee led gains in copper, zinc and nickel prices on the MCX while cushioned further decline in case of aluminium and lead.

Copper

Copper declined around 0.5 percent on the LME on Wednesday, as mounting worries over eurozone debt crisis weakened demand outlook for the copper.

Additionally, a stronger dollar and weak market sentiments also acted as a negative factor for the red metal prices yesterday. Copper touched an intra-day low of $7986/tonne and ended its trading session at $8019.25/tonne on Wednesday.

On the MCX, copper April contract rose around 0.3 percent due to depreciation in the rupee.

Crude Oil To Weigh Down On Rising US Inventories

Nymex crude oil prices declined by 1.5 percent yesterday on the back of more than expected rise in US crude oil inventories which rose twice than the forecast coupled with a stronger dollar index.

Oil prices touched an intra-day low of $102.19/bbl and closed at $102.67/bbl on Wednesday. On the MCX, crude oil prices declined by 0.8 percent and closed at Rs.5,324/bbl after touching an intra-day low of Rs.5,311 yesterday.

EIA Inventories Data

As per the US Energy Department (EIA) report released yesterday, US crude oil inventories raised twice than expected by 3.9 million barrels to 369.0 million barrels for the week ending on 13th April, 2012.

Gasoline stocks dropped by 3.7 million barrels to 214.0 million barrels and whereas distillate stockpiles also declined by 2.9 million barrels to 129.0 million barrels for the last week.

News

As per the Iraq’s Deputy Prime Minister Mr. Hussain al-Shahristani, world crude oil market is quiet balanced. There is also no need for Organization of Petroleum Exporting Countries (OPEC) to change its production quotas if crude oil demand remains same at current levels.

OPEC ministers are scheduled for a meeting in Vienna on 14th June 2012. Iraq is also hosting an international diplomatic gathering in May for the discussion on Iran’s alleged efforts of developing the nuclear weapons as sanctions have restricted buyers for the crude oil from Iran.

In response to this Iran has threatened to shut the Strait of Hormuz which transit one fifth of world’s oil.

Precious Metals Edge Lower On Strong US Dollar

Spot gold prices traded higher in the initial part of the trade on Wednesday, on the back of positive growth forecast from the International Monetary Fund (IMF) which raised its 2012 global economic growth forecast to 3.5 percent from the previous 3.3 percent. But, deepening worries over Europe’s debt crisis led weak sentiments in the markets which resulted gold to come under pressure in the later part of the trade.

In addition to this, strength in the US Dollar Index also acted as a negative factor for yellow metal prices. However, a weaker rupee led gains on the domestic bourses.

The yellow metal touched an intra-day low of $ 1637.29/oz and ended at $1640.07/oz yesterday. MCX Gold June contract rose slightly around 0.1 percent, touching an intra-day high of Rs.28,580/10 gms and closed at Rs. 28,518/10 gms on Wednesday.

Silver

Spot silver prices came under pressure and traded lower by 0.3 percent on Wednesday taking cues from fall in gold prices along with strength in the US Dollar Index. Silver being an industrial metal also took cues from downside in base metals pack.

The white metal touched an intra-day low of $ 31.34/oz and ended its trading session at $31.60/oz yesterday. MCX Silver May contract ended on a positive note on Wednesday on account of a weaker rupee and touched an intra-day high of Rs56,280/kg.