Oil jumps on winter demand, grains lower
06:58 p.m Jan 11, 1999 Eastern
NEW YORK, Jan 11 (Reuters) - Winter weather in the
northern United States bolstered oil and hog prices on
Monday as traders keyed off supply bottlenecks due to
ice and snow.
In other commodity markets, grain markets fell on
farmer sales and ahead of government crop estimates
due on Tuesday. Gold and silver prices closed firm as
the dollar sagged.
At the New York Mercantile Exchange, heating oil
prices led a surge in prices as a new snowstorm
sweeping through the upper Midwest is expected to
dump up to six more inches of snow this week on the
Northeast, the top U.S. heating oil consumer.
Heating oil for February delivery closed 1.32 cents a
gallon higher at 37.43 cents, with February gasoline
closing 0.96 cent a gallon higher at 39.15 cents.
February crude rose 37 cents to $13.44 a barrel.
Winter storms that have lashed the United States since
the start of the year have bolstered sentiments of oil
traders battered by months of swollen world oil
supplies. Crude oil hit 12-year lows last month on a
lack of success by oil exporters in cutting back their
shipments.
Last week, a huge 15-million-barrel year-end
drawdown in U.S.
crude oil stocks was reported for the week ended
January 1, encouraging speculators to buy. But analysts
said the drawdown reflected artificial demand that was
a function of tax needs.
''As the normal pattern restores these stocks during
January, we anticipate profit-taking tomorrow ahead of
the data,'' said Tim Evans, analyst at Pegasus
Econometrics Group, referring to Tuesday's weekly
report on oil stocks and usage by the American
Petroleum Institute, an industry group.
A warming trend was forecast by the end of the week.
Still, the storms helped to support pork prices, which
continued to soar as icy roads and cold weather made it
harder for farmers to market hogs in Iowa and
Minnesota. Packer profitability has also soared.
At the Chicago Mercantile Exchange, February lean
hogs closed up the daily 2.00-cent-per-pound trading
limit at 39.200 cents, while February pork bellies rose
the 3.00-cent-per-pound trading limit to 52.225 cents.
Cash prices remained strong as packers bid higher to
obtain hogs. The pork carcass ''cutout'' value, the
dollar return for processors in selling pork cuts, rose
another $2.41 per hundred pounds to $48.50 on
Friday, up $8 since the start of the year.
Wintry weather had lifted corn prices last Friday, but
the markets tumbled on Monday after merchandisers
reported brisk sales of grain by farmers at country
elevators. The Agriculture Department will issue
estimates of grain production and stocks on Tuesday,
prompting some cautious sales.
March corn closed 2 cents lower at $2.19-3/4, March
soybeans 7-3/4 cents a bushel lower at $5.42-1/4 and
March wheat 5-1/2 cents lower at $2.85-3/4.
Gold and silver prices ended higher, partly on weakness
in the U.S. dollar, which slid to a 28-month low against
the Japanese yen. Stronger foreign currencies against
the dollar make dollar-denominated metals more
attractive overseas.
''Some of the recovery in gold prices in recent days has
been driven by the slump in the dollar against the yen
and other currencies, as the stronger yen makes it
cheaper to import gold into Japan, and because the
weaker dollar encourages some diversification away
from paper financial assets and into hard assets,'' said
James Steel, an analyst with Refco in New York.
February gold at COMEX ended up $1.60 at $293.60
an ounce, after seeing a three-week high for the
contract at $294.30. March silver ended up 6.70 cents
at $5.355 an ounce, after seeing a 3-1/2-month high at
$5.385.
((Chicago commodities desk(312)408-8720,
chicago.commods.newsroom+reuters.com))
Copyright 1999 Reuters Limited. |
