Is the bull market in commodities over? The 75 per cent reduction in the Federal funds rate and big rally in the stock market has some wondering if the whole cycle of monetary stimulus may be almost finished.
Several commodities were significantly lower on Wednesday.
The US government announced that it is lowering the capital requirements for Fannie Mae and Freddie Mac from 30 per cent to 20 per cent in an effort to help provide more liquidity to the mortgage market. May lumber ended up .30 at $221.60, one of the few commodities that was not lower today.
First quarter earnings for Morgan Stanley, the nation's second largest investment bank were down roughly a third from a year ago, but much better than expected. This added to yesterday's similar good news from Goldman Sachs and Lehman Brothers. The June S&P 500 gave back much of yesterday's gain, closing down 34.60 at 1,299.40.
Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were up 200,000 barrels last week to 311.8 million barrels and 700,000 barrels were added to the Strategic Petroleum Reserve. Supplies of gasoline were down 3.5 million barrels while heating oil supplies were down 3.2 million barrels. May crude oil dropped $5.96 to $102.54, the lowest close in two weeks.
The DOE also said that refinery use dropped from 85.0% to a sluggish 83.8% last week. Over the past four weeks, gasoline demand was down .1% from a year ago while distillate demand was down 5.4% from a year ago. May gasoline closed down 10.09 cents at $2.5755.
Metals June gold closed down $59.10 at $949.70, the lowest close in three weeks, blamed on profit-taking