May 12, 2011 / 9:37 AM / 8 years ago

COMMODITIES-Oil up after rollercoaster ride; CRB rebounds

 * Oil up after early dive; CRB rebounds from 3-1/2 mth low
 * Silver, gasoline end down 2 pct; extend Wednesday slide
 * Bulls attempt to take charge again, but markets on edge
 (Recasts and updates prices to close)
 By Barani Krishnan
 NEW YORK, May 12 (Reuters) - Battered commodity markets
found some stability on Thursday after a week of rollercoaster
trade, with prices pulling out of steep early losses after the
dollar gave up early gains.
 Oil, copper and corn all closed higher, recouping sharp
initial losses caused in part by news of a fifth successive
reserve rate rise in China. But sentiment remained fragile
after two precipitous routs in the past week that reminded some
traders of the worst days of the 2008 financial crisis.
 The 19-commodity Reuters-Jefferies index .CRB, which acts
as a global benchmark for the asset class, settled up about
half a percent. It had fallen as much as 1 percent earlier,
hitting a 3-1/2 month low, as the dollar hit a three-week high
against major currencies.
 Analysts said bulls were attempting to take charge of
commodity markets again, putting a floor under a decline that
threatened to rattle confidence in the longer-term trend just
as fiscal policies around the world start to grow tighter.
 "We're getting concerns about slowing growth, rising
inflation, rising interest rates, money leaving the commodities
sector," said Edward Meir, senior commodity metals analyst at
MF Global in New York.
 U.S. crude oil CLc1 settled up 76 cents, or 0.8 percent,
at $98.97 a barrel, after straying below $96 at one point and
rising just above $100 at its height.
 Silver and gasoline fell about 2 percent each, sliding
deeper into the red after Wednesday's 8 percent loss.
 Benchmark silver for July SIN1 settled down 71.8 cents at
$34.797 per ounce after the Shanghai Gold Exchange raised
margin requirements on the precious metal.
 U.S. gasoline futures RBc1 finished down about 0.6 cents
at around $3.06 per gallon.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 ANALYSIS-Commodities margins: art, science or politics?
   [ID:nN12192374]
 COLUMN-Oil volatility and crowded trades[ID:nLDE74B17G]
 Graphic: Commodity sell-off and open interest
    r.reuters.com/jum49r
 Spreadsheet of one-day change in OI on May 11:
    r.reuters.com/qug59r
 Spreadsheet of change in OI since April:
    r.reuters.com/pug59r
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 NO EXODUS
 While the number of open trading positions in many
commodity markets has fallen over the past days and weeks,
suggesting bullish investors are closing out positions, the
opposite has been true in other markets such as oil, suggesting
the latest declines are part driven by short sellers.
 Open interest across 28 commodities held steady on
Wednesday, with several key markets such as crude oil and
copper actually seeing the number of open positions rise.
 Based on Wednesday's settlement prices, commodities lost
only $228 million in value -- a far cry from the $30 billion
drops that have accompanied past sell-offs.
 Last week's rout -- the worst since 2008 -- actually saw
open interest rise by $680 million. [ID:nN06303053]
 Selling pressure escalated in European trading as markets
there reacted more sharply than those in Asia to news that
China had raised bank reserve requirements by 50 basis points
in Beijing's latest move against inflation. [ID:nL3E7GC287]
 Later, U.S. data pointing to a decline in jobless benefits
claims and better-than-expected retail sales helped sentiment
somewhat, and some commodities bounced back from their lows.
[ID:nN12298327] [ID:nCAT005432]
 Still, worries over demand lingered, as some investors
questioned whether oil, metals and crops remained overpriced
after the broad rally since June last year.
  "It's a bit of a one-way street on commodities, especially
after last Friday, when everyone was shaken out and the market
came back," said Afshin Nabavi, head of precious metals trading
at MKS Finance in London. "It feels as though we could have a
bit of room on the downside."
 VOLATILE DOLLAR
 The volatile dollar was also a problem. The dollar index
.DXY, which measures the greenback against a basket of
currencies, ran up to a three-week high before retreating.
 The dollar's strength and commodities' weakness have lately
been feeding off each other. Before last week's sell-off in
commodities, investors had mostly been selling the dollar and
buying commodities. [USD/]
 "When markets sell off, you have a run into the dollar
which exacerbates things even more," Meir of MF Global said.
 Prices at 1:43 p.m. EDT (1743 GMT):                       
                           LAST      NET    PCT     YTD
                                    CHG    CHG     CHG
US crude        CLc1      99.64     1.43   1.5%    9.0%
Brent crude     LCOc1    113.88     1.31   1.2%   20.2%
Natural gas     NGc1      4.186    0.005   0.1%   -5.0%
US gold         GCM1    1507.10     5.80   0.4%    6.0%
Gold            XAU=    1506.75     7.00   0.5%    6.2%
US Copper       HGN1     398.30     6.95   1.8%  -10.4%
LME Copper      CMCU3   8785.00    85.00   1.0%   -8.5%
Dollar          .DXY     75.098   -0.229  -0.3%   -5.0%
CRB             .CRB    339.780    1.680   0.5%    2.1%
US corn         Cc1      690.25    21.50   3.2%    9.7%
US soybeans     Sc1     1341.00     7.50   0.6%   -3.8%
US wheat        Wc1      715.50   -12.25  -1.7%   -9.9%
US Coffee       KCN1     275.40     2.25   0.8%   14.5%
US Cocoa        CCN1    3038.00   -80.00  -2.6%    0.1%
US Sugar        SBN1      21.56     0.62   3.0%  -32.9%
US silver       SIN1     35.380   -0.135  -0.4%   14.4%
US platinum     PLN1    1775.00    -2.80  -0.2%   -0.2%
US palladium    PAM1     721.50     6.10   0.9%  -10.2%
(Additional reporting by Lisa Shumaker and Amanda Cooper in
London; Editing by Lisa Shumaker and Alden Bentley)


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