Commodities Mixed as Euro Pulls Back Following Portuguese Debt Auction

Commodities are trading lower to slightly mixed today, having pulled back from earlier gains in the electronic session as the euro eased off following the Portuguese debt auction.

The oil market has been seeing much of the attention this morning, as Brent crude topped the $98/bbl mark triggering a round of speculation as to if and when crude prices will once again hit the all important $100/bbl figure. This came as two fields in the North Sea halted production, adding to the immediate supply constraints brought about by the closure from the largest US field this week.

The weekly inventory data from the American Petroleum Institute (API) did little to shake prices either way, however, showing a 0.6 million barrels (mbls) increase in crude stocks for the week, while gasoline stocks jumped 7mbls and middle distillates climbed 1.6mbls.

As always, this now brings attention to the more extensive US Department of Energy (DoE) numbers, to be released by the Energy Information Administration (EIA) at 1030 EST today. Expectations are that this benchmark report will show a 1.5mbls increase in crude stocks, while gasoline stocks are anticipated to climb by 2.5mbls, and middle distillates will increase by 1.5mbls.

Both the precious and base metals complex have been seeing little in the way of interesting moves today, although gold is underperforming as broader risk appetite moves money away from the safe haven play. The German Steel Federation, meanwhile, reported that steel production in Germany recovered significantly last year, with output soaring by more than 34% to 43.8 million tonnes. This represents Germany working at 84% capacity utilisation, high above the 78% global average, although Decembers figures indicate the rate may now be flattening.

In the agricultural sector today, focus will turn to the US Department of Agriculture (USDA) publication of the latest supply and demand estimates, where further downward revisions on supply are expected due to the severe weather conditions hitting the Southern Hemisphere. Delays in the harvest of Vietnamese Robusta coffee allowed the contracts to hit the highest point since late 2008 in London yesterday, while Arabica coffee is currently holding not far from a 13-year high at $0.24/lb.

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