Weekly Round-Up: Strong US Jobs Data Boosts Commodities

Better-than-expected US jobs data helped drive up energy and industrial metal prices across the board as investors’ hopes were raised that steady recovery in the world’s largest economy will drive up global demand. However, some uncertainties still loom, not least the still-hazy outlook for the Eurozone and continued anxieties about Chinese growth.

The US Department of Labor reported Friday that July’s non-farm payrolls increased by 163,000 compared to just 64,000 in June, suggesting that employers are more eager now to hire new workers. Still, caution remains as the unemployment rate inched up one-tenth of a percentage point to 8.3 percent.

Investors were rattled earlier in the week when the US Federal Reserve took no monetary stimulus action following its regularly scheduled two-day policy meeting, even though many analysts had expected the Fed to go through with a third round of quantitative easing to boost economic activity. The European Central Bank’s (ECB) inaction following its own meeting also gave concern to investors who were expecting more than a verbal commitment that the ECB plans to get the Eurozone back on track.

In early morning trade Friday, Brent crude is up 1.5 percent at $107.51 a barrel, while copper is 1.4 percent stronger at $3.33 a pound.

Gold is 0.3 percent higher at $1,595.10 an ounce. However, strong US jobs data has decreased speculation that further monetary stimulus — which would encourage gold investors — will be provided by the Fed.

Oil and gas

Apache (NYSE:APA) reported that its net income for the second quarter plunged 72 percent from a year ago to $356 million. The company secured an average of $97.66 per barrel for crude oil, down 8.1 percent on year, while its North American gas price dropped 35 percent from a year ago to $3.17 per thousand cubic feet.

In contrast, SandRidge Energy (NYSE:SD) reported that its second quarter net income rose 45 percent to $809 million from $196 million during the same period a year ago. Its oil and gas revenue rose 38 percent on year to $429.8 million. The company raised its production projection for the full year to 33 million barrels of oil equivalent, up from its previous forecast of 32.3 million barrels.

As for offshore drilling group Transocean (NYSE:RIG), it reported a $304 million loss for the second quarter, compared to a profit of $124 million posted a year ago, largely due to the $750 million that it allocated to pay out settlements for the 2010 Gulf oil spill disaster. Nevertheless, revenue increased by 10 percent on year to $2.58 billion.

Meanwhile, Canada’s Wavefront Technology Solutions (OTCQX:WFTSF,TSXV:WEE), which develops fluid injection technology to improve oil recovery, reported that its third quarter net loss increased to $1.53 million from a loss of $927,471 during the same period a year ago due to sales and research costs. Revenue, on the other hand, rose 28 percent to nearly $1.4 million.

Copper

Investors remain hopeful that a rebound in the Chinese economy, particularly through government stimulus policies including monetary easing, will help bolster demand in the world’s largest copper-consuming nation.  In the meantime, the price of the red metal is struggling, particularly because Chinese manufacturing struggled in July. According to the National Bureau of Statistics, the factory purchasing managers’ index in the latest month fell to 50.1, down from 50.2 the previous month.

Ivanhoe Mines (NYSE:IVN) has changed its name to Turquoise Hill Resources, and starting August 8 it will be trading on the New York, NASDAQ and Toronto stock exchanges under the ticker symbol TRQ. The name change is part of the company’s financing agreement with Rio Tinto (ASX:RIO), which will allow it complete the Oyu Tolgoi copper and gold project in Mongolia.

In other Mongolia-related news, Mongolia’s former president, Nambaryn Enkhbayar, has been sent to jail for four years on corruption charges. The political uncertainties highlighted by the sentence are increasing worries about investing in the country’s mines.

In the Philippines, Philex Mining (OTC Pink:PXMFF) has suspended operations at its Padcal copper and gold mine due to typhoon flooding. Government authorities reported that discharges were running out of one of the two underground tunnels that drain clear water, and the company said operations will not resume until the matter is resolved.

Geologix Explorations (TSX:GIX) completed its $2.5 million private placement, having issued 12.51 million units at 20 cents a unit. The net proceeds will be used to continue exploration of new target areas and will go towards continued development of the company’s Tepal copper and gold project in Mexico, which is its primary focus.

Gold

Kinross Gold (NYSE:KGC) sacked CEO Tye Burt and appointed J. Paul Rollinson, executive vice president of corporate development, as his successor due to the company’s lackluster performance in recent years.

Gold Fields (NYSE:GFI) warned that it may be laying off many workers at its South Deep mine in South Africa as it looks to develop a new operating model. The company remains in negotiations with the National Union of Mineworkers.

High Desert Gold (TSXV:HDG) President Ralph Fitch said the latest drilling results at its Gold Springs project in Utah “confirm our prediction that we would find new gold mineralization in undrilled areas below outcropping gold mineralization.” The company also increased its interest in the project to 70 percent, and Fitch stated that “[o]ver the year we have added to our land package in the district and with increased ownership we can drive even greater value for our shareholders in an up-and-coming gold district.”

Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.