Monday, 16 March 2009 21:55:45 GMT
Written by Stefan Tifigiu, CFDTrading Research

Crude prices fell steeply in early trading but closed off with modest gains for the day. The initial decline was driven by OPEC’s decision to maintain current production levels. Expectations of reductions were the primary source of price strength and once this support was lifted crude prices fell as much as to $42.83 a barrel. Later in the day, strong global equity rallies began to reverse price declines. Gold prices declined slightly despite strong rallies of global equities.

Commodities - Energy

Crude Gains On Global Market Rallies despite OPEC Reductions

Crude Oil (WTI) $47.150 +.900 +1.95%
Crude prices fell steeply in early trading but closed off with modest gains for the day. The initial decline was driven by OPEC’s decision to maintain current production levels. Expectations of reductions were the primary source of price strength and once this support was lifted crude prices fell as much as to $42.83 a barrel. Later in the day, strong global equity rallies began to reverse price declines. Equity rallies were sustained by market optimism as several major financial institutions stated similar expectations for performance as Citigroup. This helped buoy the price of crude on expectations of improved global demand. However sentiment in US was weak following the results of the recent G-20 meeting which disappointed many investors that hoped for a coordinated effort to stem the global financial crisis. While the G-20 meeting provided fuel for pessimism, Amex news of increased delinquencies provided the fire as US equities declined for the day. The market’s reaction underscores fears of losses in credit-card related securities that many financial institutions have exposures to. Since much of today’s crude price gains were pushed by global equity rallies price gains will likely be short-lived. If further losses occur caused by credit-card related securities or more negative news is released related to these exposures, any optimism that has recently built up for financials can quickly topple over. This would return the market to focus on negative expectations for growth and consequently lower crude demand. Without an OPEC production decline to offset the downward pressure, this will allow for crude prices to cave in to bearish pressure. Given this situation, crude prices can be expected to pare gains in the coming sessions.



Commodities - Metals

Gold And Silver Decline On Market Rallies, May Be Poised to Rally

Gold $924.280 -5.475 -.59%
Gold prices declined slightly despite strong rallies of global equities. Some of the resilience could be attributed to declines in the US dollar for the day which may have moved some investors seeking safe-havens back to Gold. On the other hand gold’s resilience can be an indicator to investor sentiment toward the markets. Indeed, much of the market rallies in the European trading session were fueled by leaked memos and expectations of operating profits under current conditions. There is very little in the way of strong fundamental evidence that problems at financial institutions have reversed. In fact, evidence of further financial woes may have begun to surface following today’s release of increased credit-card delinquencies. Investor worries are not unfounded as several financial Institutions have sizeable exposures to credit-card related securities. Any damage there will hamper a turnaround in credit-markets and consequently an economic recovery. If this occurs, it will push demand for safe-havens. Nonetheless until that occurs, gold will likely trade flat.


Silver $12.9850 -.235 -1.78%
Silver prices fell considerably more than Gold today. Much of the move came following strong market rallies. However, this sentiment could reverse if there are any further negative releases in the markets. Given silver price weakness as compared to gold, the may be poised for a rally. Silver will likely gain in the near-term.