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NEW YORK: Oil prices have surged more than 50% from the start of the year, but don’t expect a return to triple digits anytime soon — worries about the pace of an economic recovery will continue to drive near-term volatility.”The market is manic right now,” said Phil Flynn, analyst at PFG Best. “This is more uncertainty than I’ve seen in a very long time: big rallies followed by big breaks, and that’s reflective of feelings about the overall economy.” Concerns about the recession — and more recently the timing of recovery — have translated into some big swings. Worldwide consumption faltered as the global recession took hold, sending prices lower. There have been signs of a recovery, but it won’t be a straight line. Just last month, prices swung from a 6% decline one day to a 6% gain the next. While that’s not a daily occurrence, it does signal some trepidation.On Wednesday, U.S. crude for September delivery rose 2.23, or almost 5%, to settle at 72.42 a barrel after a weekly government inventory report showed an unexpected drop in oil supplies.Weekly inventory reports typically influence crude prices, but lately the effect is more muted as other factors gain prominence.Mixed data stifle predictions. If the oil market is looking to economic reports for signs of recovery, the optimism barometer changes almost daily. Data in recent weeks have painted a mixed picture.Two recent reports, for example, signaled opposite directions: Industrial production saw its first rise in 9 months, but a measure of consumer confidence showed a surprise decline.”The data are confusing about the main question: Where are we at in the recession?” Flynn said. “One day we’re jubilant about better housing data, and the next day stocks plunge on bad retail sales. It’s all over the place.”Even a statement from the Federal Reserve, which said the economy is “leveling out,” contained a major caveat that activity would remain weak in the near term.Investors are left wondering whether the recovery is beginning, slowing, or even falling into a double-dip recession.”If the data continue to be mixed, we’ll see sideways movement in energy,” said James Cordier, president of Liberty Trading Group. “They’ll track the bounces.” He predicted that oil will trade within about a 5-7 range for the short term.”It’ll stick there until we’re clear on this recession,” Cordier said. “And at this point, who knows when that will be?”Stocks offset dollar pressure. Oil prices generally move in the opposite direction of the dollar, and in tandem with stocks. Lower crude prices typically push the greenback higher because oil is priced in U.S. dollars around the world. Conversely, crude investors look to the stock market to gauge when fuel demand will rebound. The dollar has fallen about 10% against a basket of currencies since stocks bottomed in early March, while the S&P 500 index has rebounded 45% off its lows. Both the foreign exchange market and global stocks have also seen day-to-day fluctuations based on data from around the world. Those influences are overtaking traditional supply and demand numbers in the oil market, Flynn said. Hurricane season looms. Meanwhile, hurricane season is unpredictable and can easily wreak havoc on the oil market if refineries get taken out or severely damaged. The National Hurricane Center has reported three storms — Ana, Bill and Claudette — that could affect oil production. Production disruptions boost supply worries and subsequently crude prices.Flynn said hurricane concerns may have driven up oil prices “a bit” as of late, but gains were limited because none of the three storms appear to pose an immediate threat.However, hurricane season has just begun and Cordier said he expects more storms will spark a rally in oil prices within the next 30-45 days.Meanwhile, the average price of gasoline slipped for the fifth consecutive day, to 2.628 a gallon from the previous day’s 2.634, according to motorist group AAA.China’s influence. News from the world’s third-largest economy has had a significant effect on markets around the globe in recent weeks, Cordier said. For example, a 5% drop in Chinese stocks on Wednesday pressured U.S. markets early in the session before Wall Street managed to recoup those losses. In the bond market, many analysts are concerned that major buyers of U.S. debt like China and other Asian central banks are losing their appetite for Treasurys. A Wednesday report from energy information provider Platts said Chinese oil demand rose 4.2% over last year, though Cordier noted the country has said it planned to stockpile commodities.

NEW YORK (Reuters) — U.S. Treasury debt prices surged Wednesday as investors turned to lower-risk assets like government debt following a selloff in Chinese stock markets and as U.S. stocks opened lower.The focus falls clearly on stocks with the relative absence of U.S. economic data.”Treasurys have vaulted higher as … you guessed it … stocks fell overnight,” said William O’Donnell, head of U.S. Treasury strategy at RBS Securities in Greenwich, Conn. “Risk seeking was the order of the day yesterday, and risk aversion is the overnight theme.”The benchmark 10-year note traded 26/32 higher in price for a yield of 3.41%, the lowest in over a month and down from 3.51% late Tuesday.O’Donnell noted the benchmark security’s yield, which moves inversely to price, was trading below technical resistance at 3.46 %. “A close here would set us up for a move to the early July (price) highs near 3.30%”.The overnight move higher was supported by above-average trade volume, O’Donnell said.While Treasurys slipped Tuesday, they have been on a bit of a tear lately, with a price surge Monday on the heels of last week, which was the best week for benchmark notes so far this year.Investors are fretting over the strength of the global economic recovery, and whether a five-month rally in U.S. stocks may have been overdone.The recent bond rally has flattened the yield curve, with the spread between yields on two-year notes and 10-year notes narrowing to 245 basis points from 256 basis points one week ago.The two-year note traded 3/32 higher in price on Wednesday for a yield of 0.98%, the lowest since July 23 and down from 1.04% late Tuesday. The last time the two-year yield closed below 1% was on June 22.The 30-year bond moved 1-19/32 higher in price to yield 4.26%, the lowest in over five weeks, from 4.35% late Tuesday.With little in the way of data on Wednesday, investors were looking ahead to the U.S. government’s announcement on Thursday of the size of next week’s two-, five- and seven-year note auctions.

Source:CNN

WASHINGTON (Reuters) — U.S. producer prices fell by a larger-than expected amount in July and notched a record decline compared with a year earlier as gasoline prices plummeted, government data Tuesday showed.The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate dropped by 0.9% versus a 1.8% gain in June.Analysts polled by Reuters had expected producer prices to decline by 0.3% last month.Compared with the same period last year, producer prices were a record 6.8% lower in July. They had been forecast to decline by 5.9%.The longest U.S. recession since the Great Depression of the 1930s has crushed demand and pummeled prices throughout the economy, keeping inflation pressures firmly at bay despite massive official efforts to stimulate growth.Core producer prices, which exclude food and energy costs, edged 0.1% lower in July compared with a forecast for a 0.1% rise, and after a 0.5% increase in June.The core producer price index stood 2.6% higher measured on a year-on-year basis, versus a forecast for a 2.8% advance.The Labor Department said that gasoline prices fell 10.2% in July and were down 45.2% versus a year ago, while finished energy goods overall fell by 2.4% on the month and 29.7% over the past year.Capital equipment prices edged down 0.2% in July but were up 1.8% over the year.Earlier in the production process, prices received by manufacturers of intermediate goods fell by 0.2% in July after rising 1.9% the month before. The crude goods index was down 4.5% after a 4.6% rise in June.

Source:CNN

NEW YORK (Reuters) — Treasury debt prices dipped Tuesday, surrendering some of Monday’s sharp gains as stocks rose, sapping the safe-haven allure of government debt.But losses were limited after data showing a surprise fall in July housing starts and a steeper-than-forecast drop in the producer price index, signaling negligible inflation.Investors were also taking a bit of a breather from a recent government debt rally. Treasurys gained Monday, and benchmark securities last week posted the strongest week so far this year.The benchmark 10-year note’s price, which moves inversely to its yield, traded down 10/32 for a yield of 3.52%, up from 3.48% late on Monday and down from near 3.9% about a week ago.”We’re in a bit of a consolidation phase here after a big rally,” said Carl Lantz, interest rate strategist with Credit Suisse in New York, adding that “in Treasurys, there is nervousness that we could get one of these afternoon rallies in stocks.”The Dow Jones industrial average (INDU) was trading about 0.9% higher Tuesday afternoon.For the past month, the lower edge of the 10-year U.S. government note’s yield range has been about 3.45%.”On the 10-year we are towards the bottom of the range we have been in for a while and we do expect yields to start drifting higher,” barring unexpectedly weak economic data, said Mike Pond, Treasury and inflation-linked strategist with Barclays Capital in New York.Although housing data released earlier on Tuesday initially appeared a setback for those betting that the housing market was stabilizing, details of the report may have caused bond traders to decide the data after all was consistent with other signs of stabilization in the homes market.”For the underlying trend in housing it is usually best to look at the single family homes,” Pond said.Multifamily unit starts tumbled 13.3% in July. However, groundbreaking for single family homes — the worst-hit part of the housing market, rose 1.7 % to an annual rate of 490,000 units, the highest since October.The two-year note was unchanged in price for a yield of 1.03%.Government data Tuesday showed new housing starts and permits unexpectedly fell in July. The Commerce Department said housing starts fell 1% to a seasonally adjusted annual rate of 581,000 units, well below market expectations for 600,000 units.Also, the government said producer prices fell by a larger-than expected amount in July and notched a record decline compared with a year ago as gasoline prices plummeted.”The data is consistent with our view that growth recovery is going to be very weak, and that inflation is not a problem,” Lantz said.Five-year Treasury notes traded 6/32 lower in price for a yield of 2.46%, up from 2.41% late on Monday.The 30-year bond was down 15/32 in price for a yield of 4.36%, versus 4.33% late on Monday.

Source:CNN

NEW YORK: Treasury prices rose Tuesday as the U.S. government prepares to auction a record 37 billion in 3-year notes and stocks appeared set for a sluggish start as the Federal Reserve’s policy meeting gets underway. Tuesday’s note auction is the first of three debt sales this week totaling 75 billion. The U.S. will auction 23 billion in 10-year notes Wednesday and 15 billion in 30-year bonds on Thursday as part of its quarterly refunding. The record offering is the latest in a string of large debt sales the government has held monthly as it seeks to fund a growing deficit and spur the ailing economy out of recession. U.S. stock futures were signaling a mixed opening for Wall Street as the Federal Reserve begins its two-day policy meeting Tuesday. Analysts expect the central bank to hold interest rates steady near zero percent, but investors will pay close attention to the Fed’s statement for details on its outlook and its plan to purchase 300 billion worth of U.S. debt, which is due to wind down in September. The Fed will buy Treasurys maturing between 2026 and 2039 on Tuesday. The aim is to keep interest rates lower on certain consumer loans such as mortgages and to boost the economy. Bond prices: The benchmark 10-year note was up 2/32 to 94-24/32. Its yield rose to 3.78% from 3.77% late Monday. Bond prices and yields move in opposite directions.The 30-year bond gained 9/32 to 95-15/32 and its yield eased to 4.52%. The 2-year note edged up less than 1/32 to 99-17/32. Its yield was 1.25%.The yield on the 3-month Treasury bill was 0.18%.

Source:CNN

(CNN) — Gasoline prices rose more than 15 cents in the past two weeks, the result of rising crude oil prices, according to a survey published Sunday.The average national price of a gallon of unleaded gasoline was at 2.6442, the August 7 Lundberg survey found, an increase of 15.83 cents from two weeks ago.The increase results from a full month of higher crude oil prices, said survey publisher Trilby Lundberg.”Both oil and gasoline prices are about where they were back in late June,” Lundberg said. However, “as far as pump price hikes, this is probably it for a while, if crude oil stays put,” she said.Gasoline demand is down so far this month, she said. Job losses have resulted in fewer commuters on the road, and the summer demand season is short-lived.The August 7 price is about 1.20 below gas prices a year ago, she said.The city with the lowest average price in the survey was Charleston, South Carolina, at 2.38 per gallon of unleaded. The highest was Honolulu, Hawaii, at 3.07.Here are the average prices in some other cities:– Baton Rouge, Louisiana, 2.47– Atlanta, Georgia, 2.50– Salt Lake City, Utah, 2.55– Minneapolis, Minnesota, 2.59– Boston, Massachusetts, 2.65– Portland, Oregon, 2.71– Los Angeles, California, 2.99

Source:CNN

LONDON (Reuters) — Oil edged down on Friday from a six-week high as markets looked to upcoming U.S. July employment data for clues on whether the U.S. economy could be emerging from recession.Light crude for September delivery fell 70 cents a barrel to 71.24 after briefly touching as low as 70.91.It settled 3 cents down on Thursday when lower U.S. stocks and a stronger U.S. dollar helped to pull prices off a six-week high of 72.42.”It has been a steady slip to the downside most of the morning. The BOE announcement yesterday put a little bit of gloom into the market,” said Tony Machacek, a broker with Bache Commodities in London.On Thursday the Bank of England took a far bigger step than expected to boost Britain’s recession-hit economy and stunned markets by expanding its quantitative easing plan to 175 billion pounds from 125 billion.Weekly gainOil prices are still on course for their fourth straight up week as economic confidence has grown, boosting riskier assets and knocking the dollar.For much of this year, oil prices have been unusually closely correlated to stock markets and Friday’s bearishness coincided with weaker equities as investors grew cautious before the U.S. non-farm payrolls data.”The market still looks fairly resilient,” analysts at MF Global wrote in their daily energy report.”However, at this stage, much rides on what U.S. equities will do over the next few weeks, as they have indisputably been the upside driver for most commodity complexes.”A Reuters poll on Wednesday showed the U.S. jobless rate might hit a 26-year high of 9.6% when July nonfarm payrolls data comes out on Friday, but an improvement over June with 50,000 fewer jobs lost outright.Fundamental shadowOil analysts were also wary of very bearish fundamentals as U.S. inventories have stayed very high and demand has been weak.Apart from the swollen inventories on land, oil stocks have built up at sea.The world’s biggest independent oil tanker shipping group Frontline on Thursday said around 50 very large crude carriers (VLCCs) were storing nearly 100 million barrels of crude at sea, particularly in the U.S. Gulf and Europe.”We continue to see sizeable risks to the downside for crude in the near-term as weaker demand for crude will add to already weak fundamentals for the complex,” said JP Morgan analysts in a weekly oil report.”That said, our longer-term outlook is considerably more positive as the expected boost in demand for the second half of the year will begin to cut back on commercial inventories around the world.”Oil already costs more than twice the level in December when it plunged to below 33, although it is less than half last July’s record above 147.

Source:CNN

NEW YORK: Treasury prices rose Friday after a record week of debt sales ended on a high note, easing some fears that foreign demand for U.S. debt is wearing thin. The government sold more than 200 billion in notes, bills and Treasury Inflation Protected Securities this week. It was the latest in a string of record-setting debt offerings that the U.S. has held monthly as the government seeks to fund a 1.8 trillion budget deficit. Concerns about buyer fatigue were highlighted after this week’s auctions of 2- and 5-year notes brought in fewer bids compared with last month’s auctions of the securities. Indirect bids, which include foreign central banks, were also mixed this week. Foreign demand: Many analysts are concerned that China and other Asian central banks, which are major buyers of U.S. debt, are losing their appetite for Treasurys. But those concerns were allayed after Thursday’s auction of 7-year notes garnered a healthy share of indirect bidders. “Anecdotally, it seems like we’re getting pretty good support from foreign buyers,” said Steve Van Order, fixed income strategist at Calvert Funds. He added that gauging foreign demand has been made more difficult due to a recent change in how the Treasury categorizes indirect bids. Analysts said the successful 7-year auction bodes well for the government, which needs to continue borrowing billions of dollars to pay for its various economic stimulus efforts. “What we’ve seen this last week in the market’s ability to absorb issuance is that the U.S. will be able to float debt for the foreseeable future and will be able to fund its activities,” said Joseph Brusuelas, a director at Moody’s Economy.com.But there are still questions about the long-term viability of this strategy, especially with the Obama administration’s plans to restructure health care, improve education and combat climate change. “At a certain point, the bond market will demand higher rates if the government’s very ambitious spending programs are put into practice,” he added. Move into stocks: Meanwhile, investors have shifted money into stocks and corporate bonds after a string of better-than-expected corporate earnings reports and improved economic news. The government said Friday that U.S. gross domestic product, the broadest measure of economic activity, fell at a smaller-than-expected rate in the second quarter. Stocks were moderately higher following the report, but gains were limited after Wall Street surged to a 9-month high in the previous session. Next week, the government will announce how much 3-,10- and 30-year debt it plans to auction off later in August. “We may cheapen up the longer end of the curve in advance of that supply,” Van Order said. The market is also gearing up for key economic indicators next week, such as the Labor Department’s monthly jobs report. “It’s going to be potentially an interesting week,” he said.Bond prices: The benchmark 10-year note was up 15/32 to 96-16/32 and yielded 3.55%, down from 3.61% Thursday. Bond prices and yields move in different directions. The 30-year bond gained 20/32 to 97-31/32 and its yield sank to 4.37% from 4.42%. The 5-year note edged up 10/32 to 99-10/32 and its yield was 2.56%. The 2-year note advanced 2/32 to 99-24/32, and its yield was 1.14%. The yield on the 3-month note was 0.18%.

Source:CNN

NEW YORK: Treasurys fell Wednesday, giving back earlier gains, after the government’s 39 billion auction of 5-year notes received lukewarm demand. The government said it took in 74.8 billion worth of bids for the 39 billion in 5-year notes offered, which made for a bid-to-cover ratio of 1.9. That compares with 2.58 at June’s auction of 5-year notes. A ratio below 2 is considered a sign of relatively weak demand. Tuesday’s auction came after the government sold 42 billion in 2-year notes and 27 billion in 52-week bills Tuesday. On Monday, the U.S. sold 6 billion in Treasury Inflation Protected Securities and 29.6 billion in 3-month bills. On Thursday, the Treasury will offer 28 billion in 7-year notes in the last phase of a record 200 billion weekly debt offering.Many analysts say the record amounts of debt being offered by the government each month could eventually overwhelm demand for Treasurys. Meanwhile, stocks tumbled as investors responded to news that Yahoo was partnering with Microsoft and mulled a weaker-than-expected reading on durable goods orders. Bond prices: The benchmark 10-year note was down 7/32 to 95-7/32 and yielded 3.72%, up from 3.71% Tuesday. Bond prices and yields move in different directions.The 30-year bond slid 14/32 to 95-1/32 and yielded 4.56%.The 5-year note fell 12/32 to 99-23/32 and its yield was 2.7%.The 2-year note dipped 15/32 to 99-19/32, and its yield was 1.21%.

ATLANTA (CNN) — Gasoline prices fell more than 7 cents a gallon over the past two weeks, despite a rise in crude oil prices, according to a survey published Sunday.The average price of a gallon of self-serve regular gasoline at metropolitan-area stations was 2.4859, the Lundberg Survey found — a decline of 7.14 cents from two weeks ago. That drop came despite an 8-per-gallon rise in the price of crude oil in that period, said survey publisher Trilby Lundberg.”The price would have risen instead of falling … if not for profit-margin losses for refiners and retailers,” she said. “Both refiners and gasoline retailers failed to pass through the higher oil prices and instead took cuts in their own margins.”Poor demand for gasoline because of rising unemployment was one reason the refiners and retailers absorbed the cuts, she said.But she added they “can’t hold out forever.”"They will need to pass on to consumers through the system at least a dime’s worth of oil price pressure,” she said.”I think that it will be soon,” she added. “For example, even if crude prices slip back slightly I think we can expect a gentle rise in retail gasoline,” both because of the current thin market levels and the usual lag time for price rises to work through the system.In fact, the daily gas price survey conducted for motorist group AAA has shown the national average for regular has risen the past five days. On Sunday, it was up 1.1 cents to 2.492 a gallon.The current prices are 1.51 per gallon below where they were a year ago, Lundberg said. On July 29, 2008, the average price was 3.9959 a gallon, down from that summer’s peak of 4.1124.The city with the lowest average price in the latest survey was Jackson, Miss., with 2.22 a gallon for regular self-serve. The highest average was in Honolulu, at 3.03, Lundberg said.Here are the average prices in some other cities: Houston, 2.29; Tucson, Ariz., 2.30; Little Rock, Ark., 2.33; Atlanta, 2.35; Cleveland, 2.40; Detroit, 2.43; Minneapolis, 2.49; Hartford, Conn., 2.55; Portland, Ore., 2.60; San Diego, 2.76.

Source:CNN