Crude Oil Inventories Fell

Elena
28 Sep, 2005
New York City

The Commerce Department released a better-than-expected report on durable goods orders in the month of August. The report showed that durable goods orders rose by 3.3% in August following a downwardly revised 5.3% decrease in July. Economists had been expecting orders to increase by 1% compared to the 4.9% drop originally reported for July.

U.S. MARKET AVERAGES

U.S market averages opened in the positive, following the stock futures predictions of a higher opening. Stock futures were lifted by overseas markets, which advanced on Fed Reserve Chairman Alan Greenspan’s speech on domestic economy. At the start of the trading session market sentiment was boosted and stocks were sent higher by the better-than-anticipated report, released by the Commerce Department. It came out to show that durable goods orders increased by 3.3% in August after a downward revision of 5.3% decrease in July. Economists had expected an orders rise of 0.9%. It was expected to be largely ignored as the report does not include Katrina’s impact,

Oil prices rose 32 cents to $65.32 a barrel after retreating to $65 ahead of U.S. petroleum inventory report, expected to show a slip in crude, gasoline and distillate stocks, following refinery shutdowns after Katrina and Rita.

The networking sector is leading an advance among technology stocks, rising by 1.4%. The semiconductor group is also strong, with further gains coming from software and disk drive stocks. The broker/dealer sector is a significant gainer outside of the tech space, with an advance of 1.1%.

Housing stocks fell by 1% as new home sales showed a steeper-than-expected decline in August.

MOVERS AND SHAKERS

DaimlerChrysler ((DCX)) rose 2%. The company benefited by a report published in a German newspaper saying that it is cutting 8,000 jobs at its Mercedes unit, more than previously reported 5,000.

General Motors Corp. ((GM)) is expected to be active. The company and the Canadian Auto Workers union agreed to a three-year contract yesterday, in order to avoid a future high-priced strike.

Eastman Kodak ((EK)) also is likely to be in play, because the company said it hopes total digital revenue growth for 2005 will be more than the originally expected 36%, while the year's digital earnings from operations, which were expected to increase by more than 300%, are now projected to be behind the target that company set at the beginning of 2005.

ECONOMIC NEWS

On Wednesday, the Commerce Dept. has released its report on durable goods orders in the month of August, showing much better than expected growth. However, because the data does not include the impact of Hurricane Katrina, the significance of the report is likely to be relatively limited.

The report showed that durable goods orders rose by 3.3 percent in August following a downwardly revised 5.3 percent decrease in July. Economists had been expecting orders to increase by a more modest 1.0 percent compared to the 4.9 percent drop originally reported for July.

The growth in durable goods orders was partly due to a significant increase in orders for computers and electronics products, which rose 5.5 percent in August after falling 6.5 percent in July. Orders for primary metals, fabricated metal products, machinery, and transportation equipment also had significant increases.

The Commerce Dept. also noted that excluding orders for transportation equipment, orders rose 4.2 percent in August after falling 3.7 percent in July. Orders for transportation equipment rose 1.4 percent in July following an 8.7 percent decrease in July.

Government data released Wednesday showed that crude oil inventories recorded another drop in the latest week, adding to a recent string of declines. However, stocks of gasoline advanced again during the period, adding to the surprise gain they posted in the previous week. The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 2.4 million barrels for the week ended September 23, falling to 305.7 million barrels from the 308.1 million barrels recorded in the previous week. This followed a decline of 300,000 barrels for the prior week. Even with the recent declines, oil inventories remain 11.4% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week advance of 4.4 million barrels, adding to the 3.4-million-barrel gain posted in the prior week. Gasoline stocks are now only 2.9% below their levels of last year. Inventories of distillate fuel oil fell by 500,000 barrels for the most recent week.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed. The Nikkei rose 1% on exporter issues, boosted by the weaker yen with automakers Toyota Motor and Honda Motor sharply up, offsetting losses posted by chipmakers after J. P. Morgan downgraded the semiconductor sector. Across the region South Korea’s Kospi reached another high, rising 1.6% on upbeat earnings expectations. Hong Kong’s Hang Seng gained on property stocks. Markets in Australia, Singapore and Thailand closed down.

European markets gained ground at mid-day dealings, lifted by Daimler Chrysler’s shares up 2.7% on report that 8,000 job cuts are expected at Mercedes and a positive economic data, released by the U.S. Fed Reserve Chairman. The German DAX 30 jumped 1%, the French CAC 40 rose 0.7%, and London’s FTSE 100 gained 0.4%.

ENERGY, METALS, CURRENCIES

Oil prices eased back ahead of U.S. petroleum inventory report, expected to show a slip in crude, gasoline and distillate stocks, following refinery shutdowns after the two hurricanes. Light sweet crude November delivery slipped 7 cents to $65.00 a barrel on the Nymex. Heating oil fell 3 cents to $2.0415 a gallon, while gasoline edged up to $2.1725. London Brent declined 8 cents to trade at $62.89.

Gold gained ground in European trading. In London the precious metal traded at $462.00 per troy ounce, up from $459.40. In Hong Kong gold dropped $3.90 to close at $462.05. Silver traded at $7.27, up from $7.22.

The U.S. dollar declined against the other major currencies in European trading The euro was quoted at $1.2012, up from $1.2010. The dollar changed hands at 113.13 yen, down from 113.32. The British pound was trading at $1.7679, down from $1.7755.

EARNINGS NEWS

The Topps Co., ((TOPP)) maker of trading cards and assorted candy products, posted 2Q earnings of 12 cents a share, up vs. profit of 9 cents a share a year-earlier on 9.4% sales growth, topping the analysts’ forecasts of 7 cents a share. The results incorporate a gain of $1.6 million from a reversal of income tax reserves.

Steel Technologies Inc., ((STTX)) flat steel processor, announced it expects 4Q earnings of 6 cents a share, missing analysts’ forecast of earnings of 8 cents a share. The company stated it expects shipments to be 5% below projections in its July conference call.

Horizon Financial Corp., ((HRZB)) holding company, announced that the company's quarterly cash dividend was 14 cents per share. The dividend will be paid on November 2, 2005, to shareholders of record on October 7, 2005. Horizon has risen its cash dividend twice in the last year.

Greater Bay Bancorp, ((GBBK)) financial services holding company, stated a quarterly cash dividend of 15 cents per share outstanding to shareholders of record as of October 7, 2005. The dividend is payable on October 17, 2005.

McCormick & Co., ((MKC)) spice seller, posted 3Q earnings of 35 cents a share, up from 33 cents a share in the year-ago period on 1.5% sales growth, beating analyst estimate by a penny. The company stated it continues to expect 2005 fiscal year earnings per share of $1.58 to $1.62 a share.

CORPORATE NEWS

Gazprom, the global biggest producer of natural gas, announced that it has agreed to buy a majority stake of 72.663% in Sibneft oil company for $13.01 billion, which will be the biggest purchase in Russian corporate history. Gazprom, which has been under state control since June when the government took over 50% of its stake, is trying to take a firmer position in the energy sector.

NRG Energy Inc. is in advanced talks to buy power generation company Texas Genco Holdings Inc at the minimum price of $5 billion in cash and stock. The deal involves assuming of a more than $2 billion of Genco debt.