Crude at $50, a reality

Updated: Jan 22 2007, 06:29am hrs
Bullion stood its ground through out the week in spite of a host of strong US Economic Data as the Greenback found fewer buyers on the assumption that its rally is almost on the wane.

Euro too held firm despite vacillating around the key 1.3 levels as the market appreciated the renewed strength in European economies and in anticipation of an interest rate hike in March. Dollar/yen was also weakened during the week as yen hit a speculative high on expectations of BOJs interest rate hike.

All currency pairs being at crucial levels withered away any attempts for a strong move in dollar despite each of the US Economic indicators coming out with surprisingly positive figures.

Gold traded at $635.40 an ounce and silver at $12.35 an ounce in the international market and MCX futures gold benchmark contract traded at Rs 913 and silver at Rs 19.21 per gram each.

Advances in the yellow metal was capped by weak crude prices which hovered around $50 on unseasonably warm weather, and as DOE weekly report showed huge surpluses in inventories.

Inventories had dipped by 3.8 million barrels compared to the expected figure of 3,25,000 barrels and resulting in crude oil prices to close down, for yet another week, at $51.99 a barrel in the international market. MCX futures crude benchmark contract traded at Rs 2,371 per barrel.

Rumours of Opec's emergency meeting on early production cuts as well fresh reports on Arctic winds blowing cold weather in the North East US resulted in sporadic spurts in crude prices which were stalled by IEAs and later Opec's lowering of global demand forecast.

Weak crude prices also took cues from the base metal complex, which generally looked downward during the week as LME stocks piled up.

Shanghai copper futures hit lower circuit during the week, but speculation about the Chinese restocking after their Lunar Year celebrations is providing a bottom to the market. MCX futures copper benchmark contract traded at Rs 251.60 and zinc at Rs 164.10 per kilogram each.

Spices and plantation

Almost all agriculture commodities traded bullish this week. Pepper after remaining range bound, gained toward the end of the week mainly due to the short covering and speculative buying.

The February contract in NCDEX has gained about Rs 400 from the opening price of Rs 11,189. Cardamom gained more than Rs 50 during this week as the peak arrival season is almost close to an end with the rising demand from North India.

Jeera futures, due to the strong sentiments in the spot market gained about Rs 400 this week while, chilli was also trading firm.

Rubber similarly gained more than Rs 450 following the strong international rubber prices. The increased consumption rate, mainly because of the higher usage in the tyre industry strengthened the prices to remain in the bullish side.

However, the weak crude oil prices have put a check on the further upward movement of rubber prices.

Pulses and others

Pulses even though started this week in a sluggish mood ended the week in the positive side. Chana gained about Rs 50 due to the firm spot trends where it was quoted up following the buying from millers and retailers.

Urad desi and tur desi also gained on strong demand in the spot. The speculative buying, which was encouraged by the news of government keeping the import duty on soy oil and other edible oils and the recovery in Malaysian Palm oil futures, led soybean and refined soya oil to gain considerably during the week.

The cereals also witnessed a bullish movement. Maize gained about Rs 20 while wheat gained more than Rs 10 due to the speculative buying which arouse as government has eased the export norms.

Sugar on speculative buying gained about Rs 50. Mentha oil also recovered slightly on the local demand and expectations of export demand.

Courtesy: Geojit Commodities