Crude Oil Prices Resume Climb

Gasoline futures neared fresh multi-year highs and pulled oil higher on concerns that falling fuel stockpiles reported by the Department of Energy since the beginning of the year are set to continue.

"It's all about gasoline," said Jim Ritterbusch, head of oil-trading adviser Ritterbusch & Associates. "Until we get some reversal in the stock draws, you're going to see some upside in gasoline dragging crude higher."

Oil prices are trying to stage a rebound from a sharp decline earlier in the week, when prices dropped more than $6.60 a barrel in two trading sessions. Investors are attempting to gauge how the high cost of oil and other raw materials is affecting the economy and whether businesses and consumers will start cutting their fuel usage.

Earlier this week, the Paris-based International Energy Agency warned of weakening fuel usage, and the Organization of Petroleum Exporting Countries cut its demand-growth estimates for this year.

U.S. jobless claims rose to the highest level in two months last week, the Labor Department said Thursday, adding to some concerns that hiccups in the economic recovery would pressure fuel demand. New claims increased 27,000 to 412,000.

Regular gasoline is selling for $3.81 a gallon on average in the U.S., according to the American Automobile Association, inching close to the $4 a gallon level economists say will change people's driving habits and lower fuel usage.

But supplies of gasoline are still falling—U.S. inventories dropped by seven million barrels last week, according to the Department of Energy.

Supplies "are on the low side heading into the [summer-driving] season," said Andy Lebow, a trader with MF Global, based on the government's reports.

Meanwhile, continued unrest in the Middle East is keeping the oil market on edge. In Libya, fighting between rebels and pro-regime forces has reached a stalemate, with neither side appearing able to gain the upper hand.

It remained unclear whether conditions in the North African nation will indefinitely keep the bulk of Libyan oil from the international market.

Rebel forces have announced that they are producing hundreds of thousands of barrels of oil a day and are able to export limited amounts. On Tuesday, Qatar said it had helped the rebels market one million barrels of crude.

But this is still a far cry from the 1.3 million barrels of oil a day that Libya was exporting prior to the outbreak of violence in the country.

Gold Prices Hits New Record, Silver Passes $40 Mark

Gold prices hit a new record this month and silver prices touched $41 an ounce as the precious metal bulls came out in full force.

"Silver over 40 dollars now and gold over 1475 are in new technical territory," commented George Gero, senior vice president at RBC Capital Markets.

"These levels [for silver] are going to be a spring board to $50," says Anthony Neglia of Tower Trading, "maybe sooner than I think." Neglia sees $37 as the new support area for silver whereas a few weeks ago it was $30.50. "My buy recommendation [is] the July 50/55 call spread which is up 50% in a week."

As silver looks to $50, gold is looking to $1,500, which seemed like a far-fetched dream for a few weeks as the metal could not conquer the $1,450 level. Now it has and many experts think the $1,500 level will be reached in days or, at the most, weeks.

When will gold hit $1,500 "is a good question," says Will Rhind, head of U.S. operations for ETF Securities, "I think that right now with the market the way it is, who knows, it could be a matter of days."

Pat Heller, general manager at Liberty Coin Service, has noted that "the 'general public' is coming to the realization that the U.S. dollar is falling in value and contributing to noticeably higher consumer prices," which is making hard assets very appealing as a whole new portion of the population gets interested. "I think the price increases over the past two weeks are partly a reaction to this."

The rise in precious metal prices has been primarily driven by the Fed's unprecedented easy-money policies, first, following the popping of the NASDAQ bubble in 2000, then again, much higher in price following the collapse of the financial system, starting in March 2008, with the fall of Wall Street broker-deal/investment banking firm Bear Stearns.

Not unlike most global pricing, the world's traditional monetary metals are denominated in U.S. dollars, so a decline in the dollar's relative value to world supply of precious metals lifts the price of gold and silver in dollar terms.

Even if the Fed followed last week's European Central Bank's (ECB) quarter-point interest rate hike, the competition for dollars between paper assets and tangible assets won't tip the tide among investors in favor of paper assets, according to publisher and editor of the Gloom Boom Doom Report, Marc Faber.

Treasuries, Stocks, Dollar Gain on Plan to Reduce U.S. Deficit

U.S. Treasuries headed higher as Obama outlined plans to cut government spending and increase taxes, setting the stage for a fight with congressional Republicans over the nation's priorities. The gain in bonds also came as the U.S. sold $21 billion of 10-year notes. Stocks retreated as details of the plan emerged, before heading higher as the Federal Reserve's Beige Book survey bolstered optimism that the economy can weather the proposal.

"Obama's budget-cut story gave the Treasury market a bid going into the auction, with talk that was very aggressive," said Carl Lantz, head of interest-rate strategy in New York at Credit Suisse Group AG, one of 20 primary dealers that trade with the Fed. "The market remains a bit dubious of the politics, but the feeling is that there is a sign that politicians sense public frustration and have learned a lesson from Europe."

The Fed said the economy expanded at a "moderate" pace across much of the U.S. in February and March, led by manufacturing, with labor markets showing improvements in most regions.

"While many districts described the improvements as only moderate, most districts stated that gains were widespread across sectors," the Fed said today in its Beige Book report. While higher commodity costs compelled sellers to try to raise prices, pressures to increase wages were "weak or subdued."

U.S. retail sales advanced for a ninth month in March, according to the Commerce Department, increasing 0.4 percent following a 1.1 percent February gain that was larger than previously estimated.

"Consumers have a lot more energy than people thought," said David Kelly, who helps oversee $405 billion as chief market strategist at JPMorgan Funds in New York. "The tide is still a tide towards normalcy as far as the economy goes. We're going to see more positive than negative surprises. Same goes for a steady improvement in corporate profits."

JPMorgan Chase & Co. (JPM) led the U.S. market's early advance after reporting profit grew 67 percent to a second straight record as provisions for bad mortgages and credit-card loans tumbled. The stock rose as much as 1.6 percent before erasing gains and dropping 0.8 percent as Chief Executive Officer Jamie Dimon told investors not to expect dividend increases in the next couple of quarters.