Today saw major equities finish slightly down, which is to be expected after posting their largest gains in a year yesterday. American government officials continue to debate over a debt ceiling deal, although many are now predicting that the latest plan will need to be revised before it can pass through the Senate. While investors hope for a deal to be struck soon, only time will tell how long it will take for Congress to approve the legislation that will dictate how our nation moves forward with the current debt levels. As a result of this focus on debt, many commodities saw a relatively slow day, as the UBS Bloomberg CMCI index gave up just 1.9 points while the S&P GSCI finished up by about seven points in total.
One of the biggest commodity winners of the day came from crude oil, which enjoyed its second straight winning session as WTI crude closed at over $98 per barrel. Two major factors converged to help guide crude futures through another strong day and closer back towards the triple digit mark. First, there continues to be speculation that European leaders are close to outlining steps to address the region’s debt problems which feature nations like Greece and Spain who are on the brink of defaulting. Second, and more importantly, reports came in that U.S. supplies dropped today, as refineries enjoyed strong output of WTI oil. In fact, refineries are operating at their highest rates, pointing to strong global demand. With a lower supply, demand for crude pushed futures higher by 0.5% on the day for front-month contracts, adding to recent gains for the vital fuel [see also Commodity ETFs: Five Factors To Consider].
One of the biggest commodity losers on the day was lumber, which saw a rough day on poor figures for existing home sales. While many had hoped that the battered housing sector would see existing home sales increase in June, numbers came in shy of expectations. Housing starts dropped by 0.8%, putting pressure on lumber futures. On the bright side, the average price of what sales actually went through came in about 8.9% higher than the previous month, when the average price was roughly $184,000. Though many thought housing might be on the right track after a strong housing starts report earlier in the week, it failed to translate into more home sales, concerning investors. On the day, lumber futures sank by 1.3% thanks to selling throughout Wednesday’s trading session [see also Daily Commodity Roundup: Copper Gains On Housing Starts, Silver Crashes On Strong Equities].
Disclosure: Charts courtesy of Barchart. No positions at time of writing.