First Published: 2013-02-24

 

Commodity prices plummet on worries for global economy

 

Oil, metals prices retreat on worries for global economy owing to signs that US could end its cash stimulus programme, amid worsening outlook for eurozone.

 

Middle East Online

Oil market has become too buoyant

LONDON - Oil and metals prices retreated this week on worries for the global economy owing to signs that the United States could end its cash stimulus programme and amid a worsening outlook for the eurozone, analysts said.

OIL: Prices fell on worries of an end to the US stimulus programme amid global economic strains and week demand for oil in top consumer nation the United States, traders said.

Oil contracts had tumbled more than $2 on Thursday as traders absorbed poor US jobs data, signs of weaker-than-expected US crude demand and a fall in eurozone business activity.

It was the second day in a row in which crude prices fell sharply. Analysts said there was a general sense that the oil market had become too buoyant given the brittle state of the economy.

"The market had some vertigo at these high levels, and the market is now correcting," said Andy Lebow, senior vice president for energy futures at Jefferies Bache financial group.

Brent crude had hit nine-month highs above $119 a barrel two weeks previously on healthy economic data in the United States and China -- the world's two biggest economies.

But on Thursday, the US Labor Department said initial jobless claims rose to 362,000 in the week ending February 16, more than the analyst consensus estimate of 358,000.

Lebow said the oil market was also watching the Federal Reserve for any potential shift in policy.

Minutes released Wednesday by the Fed's Open Market Committee (FOMC) showed a vigorous debate on whether to continue a bond-buying programme that many analysts believe has supported higher oil prices.

Concerns over the eurozone economy also resurfaced late in the week. A leading growth indicator on Thursday showed that private business activity across the bloc hit a two-month low in February, signalling a steepening of the economic downturn.

And on Friday, the European Commission said the eurozone faced another full year of recession in 2013, as millions more people living across the region become unemployed.

By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in April slid to $114.19 a barrel from $117.69 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for delivery in April stood at $93.02 a barrel compared with $96.77 for the March contract the previous week.

PRECIOUS METALS: The price of gold hit a seven-month low point at $1,555.55 an ounce on Thursday, while sister metal silver reached a six-month nadir at $28.29 an ounce.

"The release of the January FOMC minutes on Wednesday brought about gold selling," said Austin Kiddle, analyst at broker Sharps Pixley.

Platinum prices were volatile amid fresh violence at a South African mine.

Workers at Siphumelele mineshaft near Rustenburg went on strike Tuesday after 15 of their colleagues were injured when a 1,000 strong mob besieged a rival union's office prompting guards to open fire.

Anglo American Platinum -- the world's number one platinum producer -- has been crippled by rolling strikes over wages that have hit South Africa's mining sector.

By late Friday on the London Bullion Market, gold slid to $1,576.50 an ounce from $1,612.25 a week earlier.

Silver dropped to $28.79 an ounce from $30.18.

On the London Platinum and Palladium Market, platinum fell to $1,611 an ounce from $1,676.

Palladium slipped to $732 an ounce from $754.

BASE METALS: Base metals prices retreated as renewed Chinese buying failed to offset high stockpiles.

"The return of Chinese traders to the market after their week's (Lunar) holiday has not been able to give any impetus to base metals," Commerzbank analysts said in a note to clients.

"We are still convinced that China will require large quantities of commodities over the coming months as its economic activity picks up. This should be evident in climbing metal prices. At the moment, however, supply appears to be plentiful," they added.

By late Friday on the London Metal Exchange, copper for delivery in three months slid to $7,808 a tonne from $8,214 a week earlier.

Three-month aluminium dropped to $2,049 a tonne from $2,162.

Three-month lead fell to $2,316 a tonne from $2,412.

Three-month tin slipped to $23,190 a tonne from $24,825.

Three-month nickel slumped to $16,734 a tonne from $18,342.

Three-month zinc retreated to $2,088 a tonne from $2,175.

COCOA: Cocoa futures steadied after hitting fresh multi-month lows amid large supplies of the raw material used to make chocolate.

"Dealers continued to cite ample supplies and unexciting consumer demand" for the move downward, said the Public Ledger commodities publication.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in May rose to £1,434 a tonne from £1,425 a week earlier.

On New York's NYBOT-ICE exchange, cocoa for May dipped $2,147 a tonne from $2,149.

COFFEE: Coffee prices rebounded on supply concerns as a tree fungus in Central America ravaged crops. Leaf rust has caused coffee trees to produce fewer and lower-quality beans.

"Bulls (traders forecasting high prices) keep talking about the losses from rust in Central America and the bears keep noting that there is more than enough coffee being produced in other countries to cover the losses seen," said Jack Scoville, analyst at broker Prices Futures Group.

"The bears have been in control of the market until now, but (recent) price action suggested that this control might finally be passing.

"For now, it looks like Central America could lose at least 20 percent of the total crop this year and more next year. Losses next year could be 30 percent or more of the crop," he said, adding that strong Brazilian output could help to offset the losses.

By Friday on LIFFE, Robusta for May delivery rose to $2,090 a tonne from $2,055 a week earlier.

On NYBOT-ICE, Arabica for delivery in May grew to 143.15 US cents a pound from 140.50 cents.

SUGAR: Sugar futures recovered from recent 2.5-year low points in New York caused by ample supplies.

By Friday on LIFFE, the price of a tonne of white sugar for delivery in May increased to $501.90 from $491.30 a week earlier.

On NYBOT-ICE, the price of unrefined sugar for May gained to 18.05 US cents a pound from 17.85 cents.

GRAINS AND SOYA: Soya prices gained on tight supply worries, traders said, while maize and wheat futures fell.

By Friday on the Chicago Board of Trade, March-dated soyabean meal -- used in animal feed -- increased to $14.95 a bushel from $14.24 a week earlier.

Maize for delivery in March dropped to $6.93 a bushel from $6.98.

Wheat for March retreated to $7.25 a bushel from $7.42.

RUBBER: Prices posted further declines on sluggish global demand, traders said.

The Malaysian Rubber Board's benchmark SMR20 dropped to 292.40 US cents a kilo from 305.75 cents the previous week.

 

Turkey concedes including Assad in Syria talks

Trump to be sworn in as 45th US president

IS demolishes two more monuments in Palmyra

Iran losing hope of saving trapped firefighters

More than 40 jihadists killed in north Syria air strikes

Netanyahu congratulates ‘friend’ Trump in tweet

Israel denounces Belgian plan to interrogate ex-minister

Denmark grants soldiers permission to fight IS in Syria

Car bomb near Benghazi mosque wounds 12

UN calls IS destruction of Palmyra relics ‘war crime’

Armed settlers rescued from angry Palestinian villagers

Petition filed for Israeli court to return body of Bedouin

29 Yemen rebels killed by Saudi-led air strikes

Algeria’s Islamist parties unite ahead of April elections

British worker dies on Qatar 2022 World Cup site

Search continues for trapped Iran firefighters

Trump to retain envoy to anti-IS coalition

More than 20 firefighters feared dead in Tehran building collapse

Explosions in Gaza target Fatah member

UN expert tells Saudi to end ban on women driving

Desalination plant opens in Gaza to tackle water crisis

Syria’s Assad hopes rebels disarm after Astana talks

UN says 400,000 Syrian child refugees in Turkey not in school

Libya PM skips Davos to focus on electricity crisis

Greece, Cyprus insist peace deal must include Turkish withdrawal

Mistura to lead UN delegation at Astana Syria talks

Turkey slams French satire song about Istanbul attack

Saudi minister says kingdom to become ‘softer’ after reforms

Bahrain lifts ban on electronic Al-Wasat newspaper

Arab Israelis strike in protest over house demolitions

Iran sees Syria talks as opportunity to gain influence

Kuwait upholds sentence for three royals for insulting judges

Tunisia facing mounting calls against jail-for-joint law

Iran's oldest high-rise building on fire collapses

IMF says Egypt on track for next aid tranche

Bahrain police disperse Shiite protesters

Key Syria rebel group opts out of Astana peace talks

Moroccan Sufi ‘living master’ dies at 95

France says Iraqi jihadist among 2015 stadium bombers

Russia, Turkey stage first joint air strikes against IS in Syria

IS advances on terrified citizens of Syria’s Deir Ezzor

In path to greater executive power, Erdogan faces weak Turkey economy

Switzerland drops war crimes case against former Algerian defence minister

Patience wears thin in Iraq's Fallujah

Iraq forces 'liberate' eastern Mosul