Crude gushes, soy sinks

Jul 12, 2013


Here is this week’s edition of Futures File, our weekly commodities wrap-up:
Crude gushes higher
US crude oil prices rocketed to a 16-month high on Thursday, reaching as high as $107.45 per barrel. The price exploded after a US government report showed a sharp drop in US oil supplies in its weekly inventory report. The supply drawdown came as US refiners took advantage of large US supplies trapped in Midwest storage facilities.
Rising US and Canadian oil production have produced a glut in the Midwest, but, until recently, there was little infrastructure to transport the crude. Through the use of pipelines and trains, the supply imbalance is being resolved, allowing coastal refineries to use US oil in place of more expensive imported foreign crude.
Relatively abundant supplies domestically had kept US prices low, but the free flow of crude is now bringing our oil prices in line with the global markets, where prices are much higher due to supply constraints in the Middle East and Africa.
Some analysts believe the US oil prices may weaken in the future as the US continues to reduce its imports of foreign crude, making our markets less susceptible to foreign conflicts. As of midday Friday, US crude oil futures were worth $105.60, near the international benchmark “Brent” crude price of $108.70.
USDA report sinks soy
A USDA report released on Thursday morning showed rising projections for US soybean production this year. In the report, the USDA raised estimates of planted acreage and total soybean production by 30 million bushels, a moderate increase. This caused a sell-off in the soybeans, which dropped as much as 25 cents per bushel (-1.8%) in the wake of the report. As of midday Friday, soybeans for delivery in November were worth $12.66 per bushel.
Bernanke batters dollar
Currency markets reacted violently this week to commentary from Federal Reserve Chairman Ben Bernanke. Traders had been betting that the United States would soon raise interest rates, but Bernanke said Wednesday that they would not raise rates “for some time.” This adjustment in the outlook caused a sell-off in the US Dollar in favor of foreign currencies. If US interest rates stay low, it makes other currencies more appealing than the US dollar. During the week, the US dollar lost 1.7 percent in value against the euro, with one euro worth $1.305 on Friday.



"The supply drawdown came as US refiners took advantage of large US supplies trapped in Midwest storage facilities."

Seriously, who writes this stuff and tries to justify why we are getting screwed at the pump. There is no oil shortage but prices jump to $107/bbl??????
Next up, pump prices right back to $4/gal.

JudgeMeNot's picture

Two words: refinery production.


"•S&P managed its best week in 6 months (+2.6%);
•Gold's best week in almost 8 months (+5.1% or $62);
•Treasuries' best week in 13 months (10Y -14.5bps);

•High Yield bonds best week in 20 months (+3%); and the
•USD's equal worst week in 21 months (-1.8%)."

"The Bernank" is benefiting some while disadvantaging others.

Remember: Don't fight the Fed.

"Quantitative easing explained":


Gold prices have slipped, which means the metal's best profit plays are going for bargain prices.


Gold is a currency hedge, NOT an investment.

I've been buying (GLD) periodically and recently have been lowering my average cost price.

Many "experts" say that a portfolio should hold 5-10% worth of its assets in gold. I'm around 2% right now.

Doin' better with equities.

be for real

one word GREED


Oil companies do not set the prices.....its not their fault the price is high. Why don't people get that.


I beg to differ. When you control the supply, you control the price. Refineries are making record profits but they choose not to expand.


Re: "When you control the supply, you control the price."

U.S. majors control about 7% of the world's oil reserves. Hardly a monopoly.

WTI price has been lower than Brent for quite a while. We've been lucky.

Oil is fungible - what occurs in one part of the world (Egypt) affects the price EVERYWHERE.

Majors sold off most of their refineries yrs. ago - low profit.

Environmentalism is the cause of new refineries not being built. Also, many are old and inefficient and are being closed.