Oil and the other energy commodity reversed Wednesday’s gains after the rumors that the Chinese Government was planning for an additional economic stimulus package turned out to be false.
This was combined with general economic malaise here in the U.S., where stocks traded at levels not seen since 1996.
Oil and Energy
April oil futures dropped $1.62, or 3.6%, to $43.76 a barrel -- partially reversing Wednesday’s $3.70-a-barrel gain.
On Thursday, Chinese Prime Minister Wen Jiabao told the National Peoples Congress that the country’s $585 billion economic stimulus package unveiled late last year was sufficient enough to keep the country’s gross domestic product growing at an 8% annual pace.
This comes after markets both in Asia and the U.S. rallied on hopes that the Chinese Government might expand beyond the original $585 billion stimulus package to help Chinese consumers.
It’s “possible for us to meet this target,” said Wen, at the country’s equivalent of the U.S. State of the Union speech.
China, the second-largest consumer of oil after the U.S., announced last November a $585 billion stimulus package that was primarily going to focus on construction and infrastructure projects, primarily as the worldwide economy has slowed and exports for the mighty economy have slumped.
In mid-2008, commodities saw a massive boom in price partially because of record demand from China, who was preparing for the 2008 Olympics. When the Olympics ended and the Chinese economy slowed relatively from its previous double-digit growth, commodities went through a massive collapse in price, falling from a record $147 a barrel to its current range of $40 a barrel.
Commodities are also awaiting the release of tomorrow’s all-important jobs report, which is expected to show a domestic economy continuing to slow in this difficult financial environment. Economists expect that the nation lost 650,000 jobs last month, bringing the nation’s unemployment rate to 7.9%.
Natural gas also fell by 26.5 cents, or 6.11%, to $4.075 per million British thermal units.
Metals
Gold jumped $21, or 2.32%, to $927 a troy ounce -- reversing what had been an eight-day losing streak for the metal.
Silver futures were up 20.5 cents to $13.105 an ounce, while copper futures, which are traded more as an industrial metal than a precious metal, fell 3.95 cents to $1.6460 a pound.
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