By Steve Gelsi and Laura Mandaro, MarketWatch
SAN FRANCISCO (MarketWatch) -- Commodities cooled off on Wednesday as equities fell back and tame inflation data let the air out of gold and oil futures.
With the consumer price index ticking up a modest 0.1% in November -- the smallest change since June -- sentiment shifted away from gold and crude oil and into the greenback. Read more on inflation data.
Comments from the U.S. Federal Open Market Committee late Tuesday about a lack of spark in the economic recovery continued to hang over the commodity markets.
Oil for January delivery (CLF11 87.87, -0.41, -0.46%) dropped 29 cents, or 0.3%, to $87.99 a barrel on the New York Mercantile Exchange.
Gold for February delivery (GCF11 1,387, -17.20, -1.23%) , the most active contract, dropped $13.3, or 1%, to trade at $1,391 an ounce. Read more in Metals Stocks.
Phil Flynn of PFG Best said improving economic data of late -- such as Tuesday’s strong retail sales report -- has chilled the push into commodities.
“Confidence in the economic recovery story may reduce the desire to be long anything commodity,” he said on Wednesday.
The dollar index (DXY 79.61, +0.25, +0.31%) rose to 79.586 from 79.248, bolstered by worries over Europe after Moody’s Investors Service put Spain’s debt rating on review for possible downgrade.
Stocks opened near flat, then strengthened. The Dow Jones Industrial Average (DJIA 11,504, +27.86, +0.24%) was up 29 points, while the S&P 500 (SPX 1,243, +1.72, +0.14%) was up less than 2 points
The Energy Information Administration is slated to report weekly oil inventories at 10:30 a.m. Eastern.
Late Tuesday, the American Petroleum Institute released its estimate of stockpiles, saying crude-oil stocks fell 1.4 million barrels in the week ended Dec. 10 and gasoline stockpiles rose 2.4 million barrels. Distillate inventories, which include heating oil, rose 1.95 million barrels.
The report “is weighing on prices,” said analysts at Commerzbank, with the details indicating “weaker demand for oil products.”
Analysts polled by Dow Jones Newswires are expecting a decline of 2.7 million barrels when the EIA reports its data. Gasoline stockpiles are seen rising by 1.9 million barrels and distillates to have fallen by 200,000 barrels.
