Prices snap a four-day losing streak
New York-traded crude-oil futures registered marginal gains at Nymex on Tuesday, 16 December 2014. Prices limped across the finish line closing up 2 cents, enough to snap a four-day losing streak but hardly inviting investors to think that significantly higher crude -oil prices are in the offing. Oil prices had plunged earlier in the global day following news of a dramatic interest-rate hike in Russia and a further slowdown in China's manufacturing sector.
Light, sweet crude for delivery in January rose 2 cents, or 0.04%, to settle at $55.93 a barrel on the New York Mercantile Exchange. Prices for oil futures trading on the New York Mercantile exchange made a sharp turnaround , briefly touching an all-low of $53.60 and latter hitting a high of $57.15 a barrel.
As the U.S. trading day got under way, it was a keen “risk-off” scenario in the world market place on Tuesday. U.S. stock indexes and world stock markets were lower after posting moderate gains overnight. However, as the U.S. session progressed U.S. stocks rebounded well off their daily lows, but in choppy fashion. The fact the U.S. stock indexes posted solid rebounds from their daily lows also put downside price pressure on gold and silver.
There were several worrisome developments today but the main concern is the Russian ruble plunged around 15% in value and hit another record low versus the U.S. dollar—despite the Russian central bank on Tuesday implementing an emergency interest rate increase from 10.5%, to 17%.
Crude oil prices overnight sunk to a five year low of $53.60 a barrel, basis January Nymex futures today. In stunning fashion, crude oil prices have lost half of their value since June. That's a very rare feat in any commodity market.
Surprisingly, the U.S. dollar index was under strong selling pressure today. The greenback did not benefit from any safe-haven flows amid the markets turmoil.
In other dour overnight news, China reported its HSBC purchasing managers' index (PMI) fell to a seven-month low of 49.5 in December from 50.0 in November. A reading below 50.0 suggests contraction in the sector. Meantime, the Markit data firm reported the European Union composite PMI came in at 51.7 in December from 51.1 in November. However, in Germany, the EU's largest economy, the composite PMI fell to 51.4 in December versus 71.7 in November.
Traders and investors were also looking to Tuesdays' start of the Federal Reserve Open Market Committee (FOMC) meeting to discuss U.S. monetary policy. Many believe the Fed meeting will slightly change statement wording to favor the monetary policy hawks. The FOMC could also further elaborate on a timeline for raising interest rates. The Fed has not raised interest rates in six years.
Among other energy products, gasoline for January delivery fell 3.5 cents, or 2.3%, to end at $1.54 a gallon on Nymex. The U.S. Energy Information Administration said Tuesday the average U.S. household is expected to spend $554 less on gasoline next year than in 2014.
Annual motor-fuel expenses are on track to fall to their lowest in 11 years, the reports indicated. January heating oil lost 4.2 cents, or 2.1%, to finish at $1.9600 a gallon.
January natural gas fell 10 cents, or 2.7%, to end at $3.6190 per million British thermal units.
