August 12, 2007	Sunday	Rajab 27, 1428

LONDON, Aug 11: Global commodity prices slumped this week as speculators rushed to bank profits amid concern that demand for oil and metals will slide should the world economy dampen because of the US housing crisis.

All markets remained softer after mounting fears of a global credit crunch rippled through commodity markets, analysts at BaseMetals.com said on Friday.

Nervous speculators sold commodities amid big sell-offs across global equity markets on Thursday and Friday, switching investments to the dollar and yen, which are seen as safe havens in times of financial instability.

Losses in the US subprime mortgage market — high-risk property loans to which many US banks and investment funds are exposed — is showing signs of spreading to other regions.

OIL: World oil prices dived, with a barrel of Brent below $69 for the first time since June, on concern that energy demand may weaken amid the US subprime crisis.

Demand (of energy) could be the surprising variable that could warrant more attention in the weeks and months ahead, MF Global analyst Edward Meir said.

Should it weaken in the wake of a credit-induced retrenchment, it could undo the various upward price spirals we have been seeing.The New York contract had soared to an historic high of $78.77 per barrel in trading last week, on news of declining crude stockpiles in the United States, the world’s biggest consumer of energy.

Crude futures are meanwhile sliding despite the US Department of Energy (DoE) reporting on Wednesday that crude inventories fell by 4.1 million barrels to 340.4 million barrels in the week ended August 3.

The inventory decline was much sharper than forecast. Most analysts were expecting stocks to have dropped by 2.75 million barrels.

A decline in US gasoline stocks also caught the market off guard as the government report revealed a surprise 1.7 million barrel decline in motor-fuel inventories. Analysts had forecast a rise of 775,000 barrels.

Despite falling crude inventories, the International Energy Agency on Friday called on OPEC nations to increase oil production to cope with an expected surge in winter demand in the northern hemisphere.

The IEA said in its monthly report that the main oil producers would have to release an extra 2.5 million barrels a day in the final quarter to keep up with higher than expected global demand.

The DoE had on Wednesday said that stocks of distillates, which group diesel and heating fuel, swelled by 1.0 million barrels last week, which was lower than analyst expectations for a build of 1.78 million barrels.

The Organization of Petroleum Exporting Countries is to meet in Vienna in September to make a decision about whether to change its output quota, but members have insisted that the oil market is well supplied.

Prior to their current price slump, oil futures had risen by more than 20 per cent during June and July on concerns over rising geopolitical tensions, falling US crude stocks, growing US demand for motor fuel and expectations that crude demand will rise strongly this year.

By Friday, Brent North Sea crude for September delivery plunged to $69.70 a barrel on Friday, compared with $75.57 a barrel a week earlier.

New York’s main oil futures contract, light sweet crude for delivery in September, plummeted to $70.68 a barrel, from $76.67 a barrel.

GOLD: Gold prices dipped as the dollar rose.

A stronger US unit hurts demand for dollar-denominated commodities, such as gold, because they become more expensive for buyers holding weaker-performing currencies.

That gold is not being seen as a safe haven is a worrying sign for the yellow metal, BNP Paribas analyst David Thurtell said.

To be fair though, some of gold’s losses probably derived from selling motivated purely by the need to cover losses in other markets, he added.

SILVER: Silver prices fell heavily on Friday after steadying earlier in the week. Silver fell to $12.69 an ounce on Friday, the lowest level since July 6.

On the London Bullion Market, silver dropped to $12.69 an ounce at Friday’s late fixing, from $12.96 a week earlier.

PALLADIUM AND PLATINUM: Platinum prices hit a six-year low of $1,262.25 an ounce. The white metal was also weighed down by easing fears about strike action in South Africa.

This may put some downward pressure on platinum, UBS analyst John Reade said.

On the London Platinum and Palladium Market, platinum slipped to $1,269 an ounce at the late fixing Friday, from $1,286 a week earlier.

Palladium declined to $349 an ounce, from $364.

BASE METALS: The prices of major base metals dropped, with the exception of tin, which hit an all-time high above $17,000 a ton.

Investors are getting out of the more risky positions, and metals, as commodities in general, are the assets with the highest risk return ratio, Calyon analyst Michael Widmer said.

The price of tin, however, struck an historic peak owing to tight supplies of the base metal.

On the London Metal Exchange (LME) the price of tin for delivery in three months reached $17,050 a ton — the highest point since 1989 when it was re-introduced on the London market.

Three-month aluminium prices fell to $2,599.50 a ton, from $2,675..

Three-month nickel prices dropped to $26,100 a ton, from $28,600.

Three-month lead prices slid to $2,785.25 a ton, from $3,300.

Three-month zinc prices decreased to $3,250 a ton, from $3,410.

Three-month tin prices rose to $16,352.50 a ton, from $16,237.

COCOA: Cocoa prices hit multi-month lows.

On Friday, cocoa fell to 935 pounds a ton the lowest level since early February. In New York it hit $1,829 a ton, last seen at the start of May. However it ended the week higher.

On the New York Board of Trade (NYBOT), the September contract declined to $1,854 a ton, from $1,914 the previous Friday.

COFFEE: Coffee prices dropped in London but climbed in New York.

By Friday on the LIFFE, Robusta quality for September delivery retreated to $1,816 a ton, from $1,836 one week earlier.

GRAINS AND SOYA: Grains and soya prices extended gains, lifted by strong demand and favourable weather conditions.

It has been a relatively quiet week with mostly steady volume, Allendale analyst Joe Victor said.

Wheat for September delivery gained to $6.70 a bushel, from $6.53.

August-dated soyabean meal — used in animal feed — climbed to $8.59 from $8.45.

On the LIFFE, the price per ton of wheat for November delivery jumped to 145.00 pounds, from 133.75 pounds.

SUGAR: Sugar prices melted.

London is leading the way down and, despite oversold conditions, selling continues to flow in. This is mainly due to the availability of supplies with no apparent destination, Sucden analysts said.

By Friday on the LIFFE, the price a ton of white sugar for October delivery sank to 280.20 pounds, from 299.80 pounds a week earlier.

On the NYBOT, the price of unrefined sugar for October delivery declined to 9.62 US cents a pound, from 10.23 cents a week earlier.

RUBBER: The price of rubber fell slightly in key producer Malaysia.

Rubber prices are on the downtrend due to improved weather which brings in more crops and improves supply, said an official at a rubber producing firm.

By the look of it, the rubber prices should stay positive as conditions are improving well thanks to the good weather conditions.On Friday, the Malaysian Rubber Board’s benchmark SMR20 dipped to 212.95 US cents per kilogramme, from 214.35 US cents the previous week. —-AFP