COMMODITIES-U.S. budget talks, Greece jitters hit energy market

Tue Nov 27, 2012 5:11am IST

Related Topics

Stocks

   

* Natural gas, crude oil lead commodities lower

* Soybeans and cotton buck downward trend

NEW YORK Nov 26 (Reuters) - Commodity markets were mostly lower on Monday, led down by oil and natural gas, as investors pulled money out of assets considered risky as European debt issues and U.S. budget negotiations continued.

Natural gas prices sank over 4 percent due in part to forecasts for warmer weather, while oil was hurt by macroeconomic concerns that offset potential disruptions in the Middle East.

Those losses, alongside falling cocoa and coffee markets, outweighed a rally in soybeans, that was due to the possibility that dry weather could crimp soy supplies in parts of Brazil.

The Thomson Reuters-Jefferies CRB index, a global commodities benchmark, eased 0.44 percent, losing some of the ground it gained last week when it put in its best weekly performance in two months.

Macro-economic factors remained in focus as euro-zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece on Monday. Policymakers said a write-down of Greek debt is off the table for now.

In the United States, lawmakers showed little progress toward a compromise designed to avoid mandated tax increases and government spending cuts scheduled for Jan. 1.

"Crude is feeling some pressure from the concerns about Greece and Spain, and the nagging worries about the fiscal cliff, with the stock market lower and the dollar index strengthening adding some pressure," said Phil Flynn, an analyst at Price Futures Group in Chicago.

In the broader financial markets, U.S. stock markets slipped as retailers fell on concerns about heavy discounts at the start of the U.S. holiday shopping season.

Spot gold also eased alongside commodities and equities.

Brent January crude fell 46 cents to settle at $110.92 a barrel, while the U.S. January crude gave up 54 cents to settle at $87.74 a barrel.

In the natural gas market, prices were undermined by revised weather forecasts calling for a significant warming early next month that should slow the use of gas to heat homes and businesses.

"This (sell-off) was all weather related. There was a lot of bullish sentiment built up about the weather, but the December forecast today didn't look very cold, so people had to face reality," a West Coast-based trader said.

Front-month December gas futures on the New York Mercantile Exchange, which expire on Wednesday, ended down 17.1 cents, or 4.4 percent, at $3.73 per million British thermal units after sinking late to an intraday low of $3.704.

Arabica coffee futures sank to a 2-1/2-year low, on fund selling and pressure from the spot contract's huge discount to the second position that soared to the biggest since 1986.

Elsewhere, soybeans, cotton and sugar prices bucked the downward trend. Soybean futures rose to their highest level in nearly two weeks amid concerns over dry weather in parts of southern Brazil, with prices extending their biggest weekly gain in three months.

After the worst drought in half a century slashed the size of this year's crop in the United States, importers are hoping for bumper harvests in Brazil and Argentina to help drive down prices that rallied to an all-time this past summer.

The higher soybeans helped lift cotton, while sugar was barely up.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage