Wednesday, June 6, 2012

Bullish Day For Commodities (USO, UNG, GLD, SLV, HES, LPI)

Commodities rebounded on Wednesday along with strong recovery in equities as the dollar slipped on optimism that European leaders would take necessary steps to overcome the ongoing crisis.
Crude for July delivery soared +1.90% to $85.89 a barrel on the New York Mercantile Exchange. It was trading around $86 just ahead of the supply data. On Wednesday, the U.S. Energy Information Administration reported a 100,000-barrel decline in U.S. crude supplies for the week ended June 1. Inventories of petroleum products, meanwhile, climbed much more than expected. Motor gasoline supplies rose by 3.3 barrels, while distillate stocks added 2.3 million barrels in the latest week, the EIA report said.
Investors were also encouraged by reported progress on addressing the euro zone’s debt problems. Spanish banks surged in Madrid on reports in a German newspaper that the European Financial Stability Facility may be allowed to lend money to Spain’s bank-rescue fund, helping it get closer to a recapitalization plan for the sector.
Analysts polled by Platts had pegged a 1-million-barrel decrease in weekly crude stockpiles. They also forecast an increase of 500,000 barrels in inventories of gasoline and a rise of 600,000 barrels in distillate stocks. The dollar index, which measures the greenback against a basket of six major currencies, fell to 82.21, down from 82.801 late Tuesday.
Against that backdrop, prices for the petroleum products climbed along with oil. July gasoline jumped +0.87%   to $2.70 a gallon and July heating oil added +2.10% to $2.68 a gallon. July natural gas fell -0.65% at $2.43 per million British thermal units. Gold futures for delivery in August added +1.36% to $1,638.80 an ounce on the Comex division of the New York Mercantile Exchange. Elsewhere in the metals complex, July contracts for copper added +2.78%  and platinum added +1.92%   to $3.38 a pound and to $1,468.60 an ounce, respectively.
United States Oil Fund LP (ETF)(NYSEARCA:USO) was up 0.61 (1.92%) at $32.37, SPDR Gold Trust (ETF)(NYSEARCA:GLD) rose 1.63 (1.04%) to $158.77, iShares Silver Trust (ETF)(NYSEARCA:SLV) added 1.23 (4.44%) to $28.95 and United States Natural Gas Fund, LP(NYSEARCA:UNG) fell 0.03 (-0.18%) to $16.89.
Laredo Petroleum Holdings Inc(NYSE:LPI) soared 6.20% after it increases its 2012 production guidance to +35% Y/Y and revises its capital budget to ~$900M. Total production is now expected at 11.2M-11.9M boe, a 35% increase from 2011 and 25% higher than LPI's initial guidance. Projected capex is raised $140M from its previously announced budget.
Hess Corp.(NYSE:HES) climbed 5.21% after as the oil and gas producer is named a top pick at BofA, which notes the stock has dropped to within 10% of its 2008 low. "Regardless of the European concerns, this is unwarranted," the firm says.

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