Oil prices dive below $48, gold slides on soaring US currency
LONDON, May 14: World oil prices slumped below $48 per barrel this week amid a strengthening dollar, a further increase in US crude stockpiles and signs that Chinese and US demand might tail off. The stronger US currency weighed on all dollar-denominated commodities as they became more expensive for buyers — with gold striking a three-month low point.
Cocoa futures rebounded after reaching 10-month troughs the previous week. The Commodities Research Bureau’s index of 17 commodities dropped to 294.39 points on Friday — the lowest level since February 22 — from 299.34 points the previous week.
GOLD: Gold prices sank to a three-month low this week as positive US data pushed the dollar to a six-month high against the euro.
Gold reached 420 dollars per ounce at the Friday morning fixing — a level last seen on February 11.
“Strong US data put another twist on the precious metals thumbscrew as all the metals” were under pressure, said James Moore, analyst with specialist website TheBullionDesk.com.
The dollar struck the highest level against the euro for more than six months Friday after robust sales data and better-than-expected US trade figures dispelled fears of a ‘soft patch’ in the US economy.
The euro fell to 1.2628 dollars in early European trading on Friday — the lowest level since October 22, 2004.
On the London Bullion Market, gold prices slid to 425.15 dollars per ounce at the late fixing on Friday from 435.70 dollars the previous week.
SILVER: Silver prices fell in the wake of gold, but its decline was not as marked.
“Silver has dropped back to 6.90 dollars but... the market has been more resilient than gold so far,” said Barclays Capital analyst Kamal Naqvi.
On the London Bullion Market, silver prices dipped to 6.880 dollars per ounce at the late fixing Friday from 7.035 dollars the previous week.
PLATINUM AND PALLADIUM: Palladium and platinum prices fell in sympathy with other metals in reaction to the advancing US currency.
“Weak base metal prices and a strong dollar weighed on both metals,” said UBS analyst John Reade.
Palladium hit a two-month low of 188 dollars per ounce at Friday’s morning fixing, while platinum fell to 865 dollars per ounce the same day, the lowest point since April 28.
By Friday, platinum prices declined to 865 dollars per ounce on the London Platinum and Palladium Market from 873 dollars the previous week.
Palladium prices stood at 188.50 dollars per ounce on Friday from 195 dollars.
BASE METALS: Base metals prices mainly fell owing to the dollar’s rebound and rumours of a production increase in China.
Copper reached a three-month low of 3,016 dollars per tonne earlier Friday, a level last seen on February 10.
“Greater availability of copper in China and a stronger dollar added to the weaker tone,” said William Adams, analyst with specialist website Basemetals.com.
By Friday, three-month copper prices fell to 3,048 dollars per tonne on the London Metal Exchange Friday from 3,170 dollars a week earlier.
Three-month aluminium prices dropped to 1,741 dollars per tonne Friday from 1,778.50 dollars.
Three-month nickel prices declined to 16,600 dollars per tonne on Friday from 16,800 dollars.
Three-month lead prices slumped to 926 dollars per tonne Friday from 990 dollars.
Three-month zinc prices dipped to 1,237 dollars per tonne Friday from 1,254 dollars.
Three-month tin prices were unchanged at 8,150 dollars per tonne Friday.
OIL: World oil prices fell, hitting their lowest levels for around three months, ducking below 48 dollars a barrel in New York.
That was in response to higher levels of US crude inventories amid easing demand in energy-hungry China and the United States, with the dollar’s rebound also contributing towards the decline.
“Technical analysts said the market could be looking at a new lower range,” analysts at the Sucden brokerage firm said.
“A stronger US dollar could lure fund money away from oil,” they added.
New York futures slid as low as 47.80 dollars per barrel on Friday, the lowest level since February 18, while in London, the price of Brent North Sea crude oil hit 48.01 dollars, last seen on February 22.
In its weekly snapshot, the US Department of Energy (DoE) said crude oil inventories for the week ending May 6 increased by 2.7 millions barrels to stand at 329.7 million, beating market forecasts of a 1.5-million increase.
The department said stocks were at the highest weekly level since March 31, 2002 — and the highest monthly level since July 16, 1999. Reserves of gasoline, or petrol, rose by a less-than-expected 200,000 barrels to 213.7 million ahead of the high-demand US summer driving season beginning later this month.
Rising stocks in the United States coincided with predictions of slowing economic and oil demand growth in industrialised states.
According to the International Energy Agency (IEA), first-quarter demand slowed sharply in China and the US — the main forces behind soaring 2004 demand.
Chinese demand had grown 4.5 percent or 280,000 barrels per day, compared with 19.3 percent in the first quarter last year, while the US was up 1.2 percent compared with 1.7 percent.
By Friday, New York’s light sweet crude for June delivery plunged to 48.20 dollars per barrel from 51.46 dollars the previous week.
In London, Brent North Sea crude for June delivery plummeted to 48.45 dollars per barrel from 51.81 dollars.
RUBBER: Rubber prices advanced this week owing to a continued absence of rain in major producer countries in Asia.
“Supply is weak due to lack of rains, this is the fundamental problem right now,” one London trader said. The traditional rainy season had been expected to begin in April in Malaysia, Thailand and Indonesia.
COCOA: Cocoa futures steadied after dropping to the lowest level for 10 months the previous week, but remained pressured by the prospect of a good harvest and reduced tensions in leading producer Ivory Coast.
“Cocoa futures, having pressed the lows (the previous) Friday, were addressing the upside but with languid enthusiasm,” Refco analyst Ann Prendergast said.
“Near ideal weather and statements that theres plenty of cocoa in the bush quelled any supply anxiety.”
COFFEE: Coffee prices firmed, hovering around five-year highs in London amidst fears of possible colder temperatures descending on leading producer Brazil.
Coffee hit 1,139 dollars per tonne on May 6, a level not seen since February 4, 2000.
“An initial attempt to push higher was fuelled by reports of colder weather in Brazil,” Prendergast said.
SUGAR: Sugar prices fell slightly, with demand failing to match higher supply levels.
“The market is looking for an acceleration of sugar shipments into Russia as importers buy in time for peak consumption by soft drink and ice cream companies,” analysts at the Sucden brokerage firm said.
By Friday on LIFFE, the price of a tonne of white sugar for August delivery eased to 241.20 dollars on Friday from 241.50 dollars a week earlier.
On the CSCE in New York, a pound of unrefined sugar for July delivery stood at 8.30 cents on Friday from 8.35 cents.
GRAINS AND SOYA: Soya and grains prices mainly dropped owing to favourable weather conditions in leading producer the United States, as traders digested data by the US Department of Agriculture (USDA).
Maize hit a three-month low point of 195.50 cents per bushel on Thursday, a day before wheat fell to 299 cents per bushel for the first time since February 21.
WOOL: Wool prices advanced as the Australian dollar slumped against its US counterpart and Chinese demand remained strong.
“It was a good sale (week), with some assistance from the falling US exchange rate,” the Australian Wool Industries Secretariat said.
The Australian dollar fell by 0.8 percent against the greenback in the week ending Thursday. A weaker Australian currency makes wool cheaper for buyers abroad.
“Buyers for China continued to be dominant,” the Secretariat added.—AFP
