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Thread: Why Commodities are Plunging Again

  1. #1
    Havakasha is offline

    Why Commodities are Plunging Again

    Should be interesting to see where Oil goes for the rest of the year.
    If it keeps going down it could really help out our economy and really
    hurt Peter Schiff's reputation. Lol. Just a little joke S&L.

    Why Commodities Prices Are Plunging Once Again
    Published: Wednesday, 11 May 2011 | 3:04 PM ET Text Size
    By: Sharon Epperson
    CNBC Senior Energy Correspondent

    The euro is getting murdered and commodities are plunging—again.

    Greece's debt crisis and rising inflation concerns in Poland and England have increased concerns about euro zone economies, causing a sharp sell-off in the euro and spike in the dollar.


    It's like deja vu—a repeat of last week's rout. Commodities are correcting again. Oil settled just above $98, silver is down $3, copper is at its lowest level since last December.

    Commodity traders have turned their attention from floods in the U.S. to inflation fears in Europe and China.

    Despite an easing of China's consumer inflation, there are still worries that the country will raise interest rates to slow down growth and emerging market demand for energy and other commodities will suffer.

    Today, the potential impact of Midwest floods on energy production is not as great a concern as the fact that U.S. gasoline demand is declining. High gasoline prices are gouging U.S. consumers’ discretionary incomes.

    The latest data from the U.S. Energy Department shows the 4-week average for gasoline demand is down 2.4% from where it was a year ago. Gasoline supplies unexpectedly rose last week, where most analysts were looking for a sharp decline due to refinery outages and pipelines issues.

    The surprisingly bearish report on petroleum inventories has exacerbated the sell-off in energy commodities. Gasoline futures, which rallied sharply over the past two sessions, have taken the greatest hit.

    Trading in crude oil, gasoline and heating oil futures was halted a little at 12:06pm ET after June RBOB gasoline futures fell 25 cents, reaching the daily price limit and triggering circuit breakers at the New York Mercantile Exchange to stop trading in those energy commodities.

    Trading resumed at 12:11pm ET with daily price limits now raised to $20 for crude oil and $.50 for gasoline and heating oil until 5:15 p.m. today, the end of the Globex electronic trading session.

  2. #2
    SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    This sucks as I have several commodity based ETF's. Better sell them lol. I think they're still green.

  3. #3
    Havakasha is offline
    Did Schiff steer you into those?

  4. #4
    SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    No. Just look at the graphs. Gold, all time high, Oil, near all time high..... Something is driving it. Some say QE1 and QE2. Others say global demand, yet others say speculation.

  5. #5
    Havakasha is offline
    i understand. Certainly a lot of speculation.Soros was investing in commodities but warned of bubbles
    forming. I believe he sold silver (?) a couple of weeks ago. Could have my facts wrong.
    He is pretty smart about this stuff. I tend to follow his investing strategies when i can.

  6. #6
    SiriuslyLong is offline
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Ok, now you can call me a shithead because I may have held too long. I planned on selling later in the month in front of QE2 stopping.

  7. #7
    Havakasha is offline
    No name calling here. Its hard enough dealing with the swings of the market.

  8. #8
    felivyB is offline
    felivyB's Avatar
    Joined: May 2011 Location: Los Angeles, California, USA Posts: 4


    Commodity prices over the last few weeks have been falling. Some of the most significant commodities have dropped in price. The impact this plunge may have on some costs may not be instantly noticeable, however it will affect most customers. Plunging commodity prices leaving investors jittery. This has caused many investors to buy into the market, expecting that the price would continue to move up, a classic action that creates a bubble. This bubble in prices seems to be deflating, creating a bear market situation.

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