LONDON: Brent oil prices plummeted this week to five-year lows underneath $60 per barrel as markets were rocked by shrinking Chinese manufacturing output, economic turmoil in Russia and ample crude supplies.

Oil has now halved in value since June, due also to the stronger dollar and weak demand as the global economy struggles.

Investors closely watched the situation in crude producer Russia, as the rouble crashed to a series of record lows, despite a drastic interest rate hike.

“The combined effects of slumping oil, the Russian Central Bank’s interest rate hike and falling output from China have all come together to deliver a triple blow to the markets,” said ETX Capital analyst Daniel Sugarman.

Many commodities fell in line with oil, but sentiment was subdued on Friday with many traders away for an extended Christmas and New Year holiday.

OIL: Brent prices plunged late Tuesday to $58.50 — a low last seen on May 26, 2009 — and New York crude hit a similar low at $53.60 after Opec signalled it has no plans to intervene to shore up plunging prices.

Brent had already breached the psychological $60 barrier earlier Tuesday as weak Chinese manufacturing data stoked global demand concerns.

The market however rebounded on Friday, in line with gains on global stock markets, as investors snapped up bargain crude.

The Organisation of the Petroleum Exporting Countries (Opec), the oil producers group that supplies about a third of global oil, has so far declined to cut output to curb the price plunge.

Top Opec producer Saudi Arabia said Thursday that competitive pressures prevent it from reducing output, and the kingdom can weather falling prices.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in February sank to $60.69 per barrel compared with $62.11 for the January contract one week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for January dived to $56.23 per barrel from $58.15 a week earlier.

Metals slide

PRECIOUS METALS: Gold and other precious metals fell on the back of the strong dollar after the US Federal Reserve signalled an interest rate increase was not imminent.

The gold price was “hindered by the Fed statement confirming small steps towards rising rates which has kept the dollar strong and made the metal more expensive to buy,” said Accendo Markets analysts.

By late Friday on the London Bullion Market, the price of gold fell to $1,195.50 an ounce from $1,217 a week earlier.

Silver slid to $15.86 an ounce from $17.07.

On the London Platinum and Palladium Market, platinum stood at $1,197 an ounce, from $1,231 the previous week.

Palladium decreased to $795 an ounce from $818.

BASE METALS: Base or industrial metals dived on fresh evidence of economic troubles in key consumer China.

China’s manufacturing activity worsened in December with HSBC’s purchasing managers’ index (PMI) hitting a seven-month low at 49.5 per cent, below the break-even point dividing expansion and contraction.

By Friday on the London Metal Exchange, copper for delivery in three months dropped to $6,368 a tonne from $6,467 a week earlier.

Three-month aluminium declined to $1,911.50 a tonne from $1,942. Three-month lead slid to $1,885.75 a tonne from $1,989.50. Three-month tin sank to $19,386 a tonne from $20,400. Three-month nickel dipped to $15,426 a tonne from $16,471. Three-month zinc decreased to $2,162.50 a tonne from $2,187.

COCOA: Prices gained ground, having won strength in recent months on fears that the Ebola outbreak would impact output from key producers Ghana and Ivory Coast.

By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March rose to £1,986 a tonne from £1,887 a week earlier.

On the ICE Futures US exchange, cocoa for March gained to $2,981 a tonne from $2,861 a week earlier.

Sugar at five-year nadir

SUGAR: Sugar tumbled to their lowest level since April 2009 at $383 per tonne in London, hit once again by abundant supplies.

By Friday on LIFFE, the price of a tonne of white sugar for delivery in March dipped to $391.50 from $394.30 a week earlier.

On ICE Futures US, the price of unrefined sugar for March rose to 15.34 US cents a pound from 15.18 US cents a week earlier.

COFFEE: Coffee futures also registered fresh declines.

By Friday on ICE Futures US, Arabica for delivery in March dropped to 175.55 US cents a pound from 175.95 cents one week earlier.

On LIFFE, Robusta for March slid to $1,955 a tonne from $1,973 a week earlier.

RUBBER: Kuala Lumpur rubber prices rose due to the weaker ringgit making it attractive for overseas buyers. The market was also buoyed after the Thai government said it would buy US$180m worth of rubber.

The Malaysian Rubber Board’s benchmark SMR20 rose 148.10 US cents a kilo from 143.65 US cents the previous week.

Published in Dawn December 21th , 2014