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Commodities Mixed as US Pipeline Leak Takes Focus

The leak is on the Trans-Alaska Pipeline System, which carries around 15% of US crude production to Valdez, and is the only one that carries oil from the Prudhoe Bay field.
Commodities Mixed as US Pipeline Leak Takes Focus

Commodities markets are trading slightly mixed today, shrugging off the weaker than expected non-farm payroll numbers on Friday as a weaker dollar brings about some support.

The oil market is taking focus for the most part today, however, after a pipeline leak forced BP to shut down 95% of its production from North America's largest oil field. The leak is on the Trans-Alaska Pipeline System, which carries around 15% of US crude production to Valdez, and is the only one that carries oil from the Prudhoe Bay field. The cause of the leak is being investigated by the company as well as state and federal regulators, but a delay of more than a few days is likely to filter through to the oil market itself.

With this, WTI Nymex crude is trading just 30 cents higher today, as the broader market weakness counterbalances the supportive impact of the oil leak. Meanwhile, Chinese trade data overnight showed the country imported almost 21 million tonnes of crude in December, only slightly lower than the previous month. For the full year, China's crude imports totalled 239.1 million tonnes, a 17.5% surge on the previous year. The data also showed that imports for oil products increased by a massive 44% month-on-month in December, and given the shortage of diesel, leaves the country open to becoming a net importer again for the first time in two years.

The precious metals complex is flat to slightly weaker today, failing to gain traction despite a weaker dollar. Traders have reported that recent pressure in the complex has been coming amid strong sales from the fund arena. On Friday, for example, SPDR Gold Shares, the world’s largest gold ETF, reported a net liquidation of 1.5 tonnes from its holdings, taking its 2011 total sales to already 9.5 tonnes. The world's largest silver ETF meanwhile, iShares Silver Trust, reported a net sale of 53 tonnes on Friday.

According to the Chinese Customs Authority, the country imported 345,000 tonnes of copper and copper products in December, around 7% less than the same period last year. For the full year, imports held at the previous year's record of 4.3 million tonnes however, indicating December's reduction may have come in large part due to the significant arbitrage opportunities in the market in the recent month, between the London and Shanghai exchanges. The data showed aluminium imports rising in December for the third consecutive month, as Chinese energy saving measures and the closure of domestic production necessitates the need for increased imports. Full year levels are still way below those of 2009, however, with the 955,000 tonnes imported in 2010 around 60% lower than the previous year.

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