Tue May 7, 2013 5:35pm EDT
* China April trade data expected on Wednesday
* Brent crude closes below $105 after nearing $106 earlier
* Copper consolidates early run to 3-week high
* Gold down as Australia cuts rates, ECB open to more easing
(Updates with closing prices, new analyst quote)
By Barani Krishnan
NEW YORK, May 7 (Reuters) – Oil fell on Tuesday after
initially rallying on optimism about a recovery in Europe and
worry over growing Middle East tensions, while copper
consolidated from a 3-week high as commodity investors turned
cautious ahead of trade data from China.
Gold fell for a second straight session. Its appeal as an
alternative investment faded as U.S. stocks remained near
Monday’s record highs on prospects of more central bank
stimulus. Australia cut rates to record lows on Tuesday,
shadowing last week’s move by the European Central Bank, which
said it could trim rates again.
In other markets, natural gas fell to a one-month
low, while corn struggled to rebound from its worst
sell-off in 5 weeks in the previous session.
Activity in commodities was restrained somewhat by anxiety
over what China’s preliminary trade data for April will show on
China’s imports of crude oil, iron ore and soybeans are all
likely to have increased for a second month, although copper
arrivals might ease slightly due to port strikes in top exporter
Chile, traders said.
A Reuters poll, meanwhile, showed China’s import growth for
April probably eased, suggesting the underlying momentum for
both the domestic and global economies remains tepid.
“For many investors, one reason to even be in commodities
has been the growth in China,” said Adam Sarhan, founder of
Sarhan Capital, a boutique investment advisory in New York.
“But these days, we’re increasingly seeing the narrative
change from better-than-expected economic growth in China to
The 19-commodity Thomson Reuters-Jefferies CRB index
settled down 0.4 percent after losses in 14 of the 19
futures markets it tracked.
In crude oil, the benchmark Brent grade out of
Europe’s North Sea closed down 1 percent at $104.40 a barrel. It
had rallied toward $106 earlier on data showing a second
straight month of growth in German industrial orders and fears
of oil supply disruption after Israeli air strikes on Syria
close to Damascus.
With Tuesday’s close, Brent is up nearly $6 a barrel from a
low of under $99 on April 1. Traders said the market looked ripe
for profit-taking as the rebound was built over just three
sessions, despite little positive change in global economic data
or oil demand.
“We’re getting into an area where we’ve had such a strong
run-up in price over the past few days, when really from a
fundamental standpoint it’s hard to justify. We got up here on a
lot of froth,” said Stephen Schork, editor of The Schork Report
Three-month copper on the London Metal Exchange
closed flat at $7,265 a tonne after running up to a 3 week-high
of $7,374. Traders said the market gave up gains mainly on
concerns about Wednesday’s trade data due from China, the
world’s biggest buyer of copper and other base metals.
The spot price of gold fell more than 1 percent to
hover at around $1,450 an ounce. It had soared to a mid-April
high of nearly $1,488 on Friday.