Commodities Set Records Before Pullback

Records were set in early trading, before the gains were pared or reversed.

The dollar slid to its lowest point against the euro, which fetched a peak $1.4855. A barrel of oil hit a record $99.29 in electronic trading overnight, while heating oil hit a peak $2.7154 a gallon. Those moves helped hoist gold prices temporarily over $800 an ounce, as investors shifted assets to the traditional safe-haven metal.

But the gains were tenuous, with trading becoming increasingly nervous as investors eyed a sell-off on Wall Street brought on by intensifying worries about the economy. Anxiety also appeared elevated ahead of the Thanksgiving Day holiday, when the stock markets and most commodities markets close. Trading volume is also expected to be light on Friday.

A falling dollar tends to boost commodities prices, as investors try to hedge against a currency weakness by putting money in raw materials. The greenback recovered from its worst lows of the session, however, pulling that buttress from the commodities market.

Gold for December delivery rose $7.80 to $799.20 an ounce on the New York Mercantile Exchange, after touching as high as $808. Silver futures were flat at $14.50.

Light, sweet crude for January delivery fell 57 cents to $97.46 a barrel on the Nymex. Gasoline futures shed 0.92 cent to $2.4423 a gallon, while heating oil futures rose 0.05 cent to $2.6906 a gallon on the Nymex.

The Energy Information Administration on Wednesday reported an unexpectedly large draw of 2.4 million barrels of distillate stockpiles including heating oil, which supported prices of the winter fuel. Analysts had forecast a draw of 300,000 barrels, according to a Dow Jones Newswires survey.

The report, which covers the week ended Nov. 16, also showed a decline of 1.1 million barrels of crude oil and an increase in gasoline inventories of 200,000 barrels. Analysts had expected to see increases of 700,000 barrels of both crude and gasoline stockpiles. However, a rise in crude inventories at a key Midwest delivery point weighed on prices, despite the drop in total crude supplies.

"Down in a relative sense is not down very much," given that crude was up more than $3 a barrel a day ago, said Thomas C. Willis, senior adviser and investment strategist with Mesirow Financial.

Meanwhile, the losses in many commodities mirrored the declines on Wall Street, as investors couldn't shake concerns about deepening problems in the housing and mortgage markets and uncertainty about the true scope of those troubles. Rising defaults on mortgages have already led to big losses at major financial institutions, and there are fears about how the unfolding subprime crisis could affect consumer spending, particularly during the holidays.

In housing news, the Mortgage Bankers Association said mortgage application volume fell 3.6 percent last week.

Industrial metals slumped, hit by economic concerns and falling stock prices. Copper, zinc and lead suffered the worst losses on the London Metal Exchange, with declines of more than 4 percent each. Many industrial metals including copper have seen inventories swell recently, and that continues to pressure prices.

December copper on the Nymex fell 11.05 cents to $2.9165 a pound.

Elsewhere, agricultural futures traded in a mixed range on the Chicago Board of Trade. Wheat prices remained sharply higher after briefly rising by the 30-cent market limit to $8.035 a bushel. Corn and soybean prices edged lower.

"It is in part defensive buying," said DTN analyst Gary Wilhelmi. "The markets here are reflecting the actuality that in times of trouble, you get down tot the real bedrock, it's food and you've got to get that covered."

Wheat has been in short supply this year after several harvests around the world were hurt by poor weather. Prices ran as high as $9.6175 a bushel in late September before pulling back some 20 percent from that peak. A bushel of wheat fetched $8.02 at midday, up 28.5 cents.