Crude Surges On Alaska Pipeline Closing
U.S 10-year bond yields eased off of their 3-month lows today,
ahead of the Fed’s interest rate announcement slated for tomorrow. The
move occurred as the government sold $21 billion in 3-year notes today, which is
the first of three government debt auctions scheduled for this week. Price
has rallied over the last six weeks with speculations that the Fed will end its
rate-tightening cycle to compensate for a slowing U.S. economy.
The Dollar rallied against the yen and the euro today, as
traders set up bets that the Fed will pause rate hikes tomorrow. A Fed
pause would signal weakness in the U.S. economy and dollar, especially against
an ECB and BOJ that both seem to be in a tightening cycle. Investor
sentiment looks to be bearish against the dollar ahead of the Fed meeting.
A leak was discovered in a major Alaskan oil pipeline, forcing
BP Exploration Alaska to shut down about 400,000 barrels of daily oil
production. Such a move would remove about 8% of the U.S. oil supply from
the market. As such, crude oil futures shot higher today, up 3% to close
at $76.98 a barrel. The Middle East crisis continues to loom in investors’
minds, as a manageable cease-fire is nowhere in sight. Natural gas slid on
the news to close down over 4%.
The metals traded mixed today. Gold traded up
fractionally, to close 0.5% higher. Silver and copper both fell, with
silver down 1.7% and copper down 1%. This move correlates with the rally
in the dollar, and could be seen as a set-up move before a bullish run after the
Fed meeting.
The softs traded mostly higher today. Cocoa was up 1.2%,
coffee was up 1.6% and orange juice was up 0.9%. Sugar fell for the day to
close down nearly 1%.
Grains fell across the board. Corn was down 2%, wheat
was down 0.75%, soy was down 2.5% and oats were down nearly 2%.
Meats traded mostly higher today, with cattle up .7% and
potbellied pigs up 1%.
A round of foreign economic reports were released
today.
Check them
here.
John Patrick Lee