Market Insider

Silver Big Mover, Inventory Data Hits Energy Complex


What's moving in commodities in Thursday’s trade:

Pedal on the Metals

Fed Chairman Ben Bernanke hasn't said anything to change the trend that's been in place for precious metals since start of new year, so the buying continues. Bernanke was testifying before the House Budget Committee for several hours Thursday morning.

Silver leads the rally, breaking to new highs for the year. It's up 1 percent at over $34 per ounce. Silver is the top performing commodity so far this year, up 22 percent since Jan. 1.

Gold is also gaining, rising above $1750 an ounce (psychological resistance). It reached a morning session high of $1759.70 and now $1805 appears to be next target.

Natural Gas

Natural gas futures added to gains after the government's inventories report showed a greater than expected decline in supply. The Energy Information Administration reported that supplies declined by 132 billion cubic feet, for the week ended Jan. 27.

Brent vs. WTI

The spread between Brent and WTI is getting wider. Brent futures rise, supported by Iran concerns, while WTI futures sink on larger than expected inventory build and weakening demand.

Oil demand saw the biggest weekly decline in 14 years, to a new 13-year average low of 17.653 million barrels a day, according to the Energy Information Administration. Lack of gasoline demand is a big culprit, as drivers cut back, sending gasoline demand to a decade low.

Gasoline's Epic Summer?

At the same time, Citigroup's Seth Kleinman says at a conference in London Thursday that it will be an "epic summer" for gasoline prices, due to U.S. and European refinery shutdowns that could hit supply during peak driving season.

But today's action in RBOB on the NYMEX shows gasoline futures slipping on worries about that falling demand. Gasoline stocks rose by three million barrels last week, well above the anticipated 200,000 barrels. Traders see fodder for more refinery capacity reductions.

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