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Crude oil slumps on US economic woes

LONDON: Crude oil prices dived this week on fresh concerns about the pace of US economic recovery, while gold slid back under $1,000 per ounce on profit-taking.

Elsewhere, traders eyed the Group of 20 nations’ two-day summit in Pittsburgh that begins on Thursday. G20 leaders are promising tough action to police markets and prevent a repeat of the global financial crisis.

Oil: Crude oil prices slumped on evidence of weak energy demand in key consuming nation the United States. The market had shed more than three dollars on Thursday as mixed US economic data and signs of sluggish oil demand highlighted fears about a tepid recovery from the global recession. Prices had already fallen almost three dollars on Wednesday in reaction to a large jump in US crude oil inventories — a sign that energy demand remains weak.

Worries about the pace of the US economic recovery intensified after data Thursday showed existing home sales fell 2.7 percent in August to 5.10 million units, snapping a winning streak. On Wednesday, a widely-watched Department of Energy report showed US crude reserves rose 2.8 million barrels in the week to Sept 18, against analysts’ expectations of a decline. Stocks of distillates, which include heating fuel, rose by three million barrels last week. Distillates are being closely monitored ahead of the northern hemisphere winter when demand for heating fuel peaks.

Energy demand has plunged after the global economy slipped late last year into its worst recession since the 1930s. This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December. Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.

Oil prices had risen strongly above $70 on Tuesday as the European single currency struck a one-year high point above $1.48. But the dollar has since clawed back some ground. Since oil is traded in the US currency, a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.

By Friday on London’s InterContinental Exchange (ICE), Brent North Sea crude for delivery in November sank to $65.38 a barrel from $71.25 a week earlier. On the New York Mercantile Exchange (NYMEX), light sweet crude for November slid to $66.62 from $72.07 for the now-expired October contract a week earlier.

Precious metals: Gold prices retreated as traders cashed in gains from last week’s strong rally which saw the precious metal climb within a whisker of a record high. Gold sank as low as $985.28 per ounce on Friday, which was the lowest point for more than two weeks. The previous week, gold had struck $1,024.28 an ounce, which was the best level since March 2008 when it hit a record $1,032.70.

Gold is regarded as a safe bet for investors to guard against inflation, which is of growing concern following trillions of dollars in borrowing by governments and radical measures including the printing of new money. By late Friday on the London Bullion Market, gold fell to $991.50 an ounce from $1,012 a week earlier. Silver slid to $16.20 an ounce from $17.11. On the London Platinum and Palladium Market, platinum eased to $1,330 an ounce at the late fixing on Friday from $1,337. Palladium dipped to $299 an ounce from $304.

Base metals: Base metals prices mostly fell amid concerns about Chinese demand tailing off.

By Friday on the London Metal Exchange, copper for delivery in three months sank to $5,928 a tonne from $6,220 a week earlier.

Three-month aluminium fell to $1,832 a tonne from $1,929. Three-month lead firmed to $2,198 a tonne from $2,195. Three-month tin decreased to $14,400 a tonne from $14,600. Three-month zinc slipped to $1,880 a tonne from $1,923. Three-month nickel dipped to $16,876 a tonne from $17,165.

Sugar: Sugar futures fell after reaching 28-year highs earlier this month. By Friday on LIFFE, the price of a tonne of white sugar for delivery in December slid to 577 pounds from 582 pounds a week earlier. On NYBOT, the price of unrefined sugar for March fell to 21.78 US cents a pound from 23.67 cents.

Grains and soya: Maize and wheat prices advanced but soya pulled lower amid unease about frosty weather in key producer United States. By Friday on the Chicago Board of Trade, maize for delivery in December rose to $3.38 a bushel from $3.18 a week earlier. November-dated soyabean meal — used in animal feed — decreased to $9.29 from $9.41. Wheat for December rose to $4.72 a bushel from $4.57.

Rubber: Malaysian rubber prices dropped due to a quiet market amid the Eid al-Fitr holiday, dealers said.

They said traders stayed on the sidelines due to the long festive holiday even after the market reopened on Wednesday. On Friday, the Malaysian Rubber Board’s benchmark SMR20 fell to 208.30 US cents per kilo, from 209.70 cents last week. afp

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