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.


Mixed verdict by Israeli court for settlers who burned Palestinian teen alive

Syria regime denies chemical weapons use

Erdogan: Turkey will not apologise to Russia

Iran pilgrims break through Iraq border fence

Tunisia olive production at risk of halving by 2030

UAE says ready to commit ground troops in Syria

3 Saudi soldiers killed on Yemen border

Syrians negotiate rebel exit from Homs

Frustration grows as Tunisia keeps border shut over deadly blast

France says cooperation with Syria not possible under Assad regime

Iran: Saudi plan for Syria ignores Vienna agreements

Iraq PM says country has sufficient forces to fight IS

Kuwait names new acting Oil Minister in cabinet reshuffle

Number of ISIS executions hits more than 3,500 in Syria alone

‘Russia’ air strikes kill at least 18 civilians in Ariha town in Syria

EU offers Turkey cash, closer ties at migration summit

Saudi women begin first-ever campaigns for public office

Bashir takes another step on path of rapprochement with Gulf countries

Iran wants closure of nuclear probe in order to implement deal

Iran General ‘seriously wounded’ in rocket attack in Syria

Turkey seeks to ease tensions with Moscow

Turkey protests against journalist arrests

Corbyn criticised over Syria air strike rejection

Saudi women begin first-ever election campaign

Russia prepares retaliation against Turkey

Tunisia to rethink anti-IS strategy

Cameron pushes for Britain to join Syria air strikes

Erdogan denies buying oil from IS

Lavrov says no war with Turkey after 'planned provocation'

Tunisia under state of emergency

Missing Iranian diplomat found dead in Saudi

Heavy Russia raids at site of Syria plane crash

Tunisia declares state of emergency after terrorist attack in heart of capital

Bahrain calls HRW torture report 'misleading'

Syria, Russia foreign ministers set Moscow talks

Rival Libya tribes sign peace deal to end months of fighting

Turkey reveals new cabinet of Erdogan allies

Turkey downs Russia Su-24 fighter jet on Syria border

Hopes fade away as Sudan peace talks break without deal

At least 6 dead in Libya bomb attack

Somali pirates seize Iran fishing boat with 15 crew

ISIS suicide bombers kill four in assault on Sinai hotel

Kerry visits Israel with scant hopes for major breakthrough

Hollande heads to Washington to seek support for war on ISIS

Brussels extends terror alert as US issues worldwide travel warning