Crude oil slumps, dragging most commodities lower

LONDON, Aug 18, 2006 (AFP) – Crude futures plunged this week, in line with many commodity prices, amid evidence of an economic slowdown in the United States and a lowering of tensions in the Middle East, analysts said. But nickel prices hit a fresh historic record on keen demand, while coffee soared on concerns over stretched supplies.

On Friday, the Commodities Research Bureau’s index of 17 commodities fell to 330.62 points, from 346.30 points the previous week.

GOLD: The price of gold retreated to a one-month low as demand was hampered by reduced US inflationary pressures and receding geopolitical concerns.

“Gold remains at risk of further price pressure,” said James Moore, analyst for specialist website TheBullionDesk.com.

He said this was because of “the recent reduction in safe-haven concerns, coupled with a reduction in (US) inflation woes as oil prices soften”.

The precious metal usually benefits from its safe-haven status in times in geopolitical instability, while gold is also seen as a good hedge against increasing costs.

On the London Bullion Market, gold prices dropped to 613.90 dollars per ounce at Friday’s late fixing, from 644.50 dollars a week earlier.

SILVER: Silver prices recoiled.
“Silver, which has performed better in recent weeks was not able to make much headway before a combination of weak oil, gold and base metals dragged it lower,” said UBS analyst John Reade.

On the London Bullion Market, silver prices fell to 12.01 dollars per ounce at Friday’s fixing, from 12.27 dollars the previous week.

PALLADIUM AND PLATINUM: Platinum prices followed other precious metals lower, but palladium hit two-and-a-half month high on speculative buying.

“Our technical analysts remain sceptical over prospects for further gains, citing the lack of strong price action in other precious metals as an important negative factor limiting the potential for further upside,” Barclays Capital said in a note.

On the London Platinum and Palladium Market, platinum stood at 1,217 dollars per ounce at the late fixing Friday, from 1,245 dollars the previous week.

Palladium rose to 334 dollars per ounce on Friday from 321 dollars the previous week.

BASE METALS: Base metal prices mainly fell this week, while nickel enjoyed a record-breaking run owing to falling global stocks and keen demand from stainless steel makers.

Nickel, a metal used to help prevent corrosion, hit 29,200 dollars per tonne on Wednesday on the London Metal Exchange (LME).

Sucden analyst Michael Davies said that he expected the market to test the 30,000 dollar per tonne level.

Adding to bullish sentiment are supply disruptions in the form of a strike at Inco’s 54,000-tonne-per-year Voisey’s Bay nickel mine in Canada.

Meanwhile copper prices slid in reaction to a surprise increase in LME copper stocks, but falls were limited by the closure of the Escondida mine in Chile, the world’s biggest copper mine, in a dispute over pay.

On Friday, three-month copper prices on the LME fell to 7,481 dollars per tonne from 7,910 dollars the previous week.

Three-month aluminium prices rose to 2,484 dollars per tonne from 2,564 dollars.

Three-month nickel prices soared to 28,400 dollars per tonne from 27,200 dollars.

Three-month lead prices advanced to 1,204 dollars per tonne from 1,190 dollars.

Three-month zinc prices decreased to 3,295 dollars per tonne from 3,430 dollars.

Three-month tin prices eased to 8,425 dollars per tonne from 8,450 dollars.

OIL: Crude futures nosedived this week after a UN-brokered ceasefire deal began between Israeli forces and Hezbollah guerrillas on Monday, and BP said it would maintain half of output at Prudhoe Bay in Alaska.

Prices sank around four dollars over the course of the week to reach two-month lows.

New York crude fell below the 70.0 dollar mark on Friday to lows last seen on June 21.

News of the Middle East truce on Monday made traders re-assess their fears of a wider regional conflict affecting oil shipments.

Added to the picture, the market was calmed by news that BP would continue pumping 200,000 barrels per day at the Prudhoe Bay oil field, which normally makes up 8.0 percent of total US production.

Losses increased after a series of US economic releases confirmed a slowdown in the US economy, which dampened prospects for crude demand because the United States is the world’s biggest oil consumer, dealers said.

And the Organization of the Petroleum Exporting Countries (OPEC) Wednesday cut its forecast for world oil demand by 80,000 barrels per day.

The 11-nation cartel said demand would average 84.5 million bpd in 2006.

Crude futures staged a slight rebound on Friday as traders switched their focus to the nuclear energy crisis in Iran.

Iran, the world’s fourth biggest crude oil producer, has until August 31 to halt its uranium enrichment programme or face the threat of UN sanctions.

At about 1600 GMT on Friday in New York, a barrel of crude for delivery in September sank to 69.90 dollars per barrel from 74.10 dollars the previous week.

In London, a barrel of Brent North Sea crude for delivery in October slumped to 71.92 dollars per barrel, from 75.99 dollars.

RUBBER: Rubber prices fell owing to sparse rain in leading Asian exporters.
“Supply from the trees has been better than it has been for some time, although there’s still been some sporadic rains,” said Corrie MacColl trader Rashid Ahmed.

On TOCOM, Tokyo’s commodity exchange, natural rubber for January delivery fell to 252.80 yen per kilogramme on Friday, from 266.50 yen a week earlier.

Singapore’s RSS 3 December contract slid to 215.25 US cents per kilogramme on Friday, from 229 US cents a week earlier.

COCOA: Cocoa prices rose declined amid encouraging signs of a bumper harvest in leading producer Ivory Coast.

On the LIFFE, London’s futures exchange, the price of cocoa for December delivery decreased to 869 pounds per tonne on Friday, from 894 pounds a week earlier.

On the New York Board of Trade (NYBoT), the December contract slid to 1,543 dollars per tonne on Friday, from 1,602 dollars a week earlier.

COFFEE: Coffee prices hit the best level for six and a half years in London on concerns over tight supplies in Vietnam.

However, Arabica prices fell on forecasts of an abundant harvest in Brazil.

On LIFFE, Robusta quality for November delivery gained to 1,460 dollars per tonne on Friday, from 1,408 dollars a week earlier.

On NYBoT, Arabica for December delivery slid to 106.90 US cents per pound on Friday, from 108.80 cents.

SUGAR: Sugar prices fell in London to 374 dollars on Thursday — the lowest point since January 4. New York prices sank to 11.96 cents, last seen in November 2005.

“The market remains under pressure from low physical demand amid plentiful supplies,” added Davies.

On LIFFE, the price of a tonne of white sugar for October delivery dropped to 378 dollars, from 407 dollars a week earlier.

On NYBot, the price of unrefined sugar for October delivery declined to 12.25 US cents per pound, from 13.40 cents.

GRAINS AND SOYA: Wheat and soya prices mostly retreated amid heavy rains in the United States which is deemed more favourable for harvests.

On the Chicago Board of Trade, the price of wheat for September delivery fell to 3.61 US dollars per bushel on Friday, from 3.77 dollars a week earlier.

Maize for September delivery decreased to 2.18 dollars per bushel on Friday, from 2.29 dollars.

September-dated soyabean meal — used in animal feed — dipped to 5.49 dollars per tonne on Friday, from 5.55 dollars.

On the LIFFE, the price of a tonne of wheat for November delivery firmed to 82.00 pounds on Friday, from 81.25 pounds.

COTTON: Cotton prices slipped owing to rainy weather in the US, which increases harvests, and weaker Chinese demand.

On the New York Cotton Exchange (NYCE), the December contract stood at 54.80 US cents per pound on Friday, from 55.85 US cents a week earlier.

The Cotton Outlook Index of physical cotton eased to 59.85 US cents on Thursday, from 59.90 US cents a week earlier.

WOOL: Wool prices advanced in Australia due to high Chinese demand.

“Buyers for China were dominant,” the Australian Wool Industries Secretariat said.

The Australian Eastern index closed at 7.45 Australian dollars per kilo on Thursday, from 7.42 the previous week. The British Wooltops index stood at 401 pence on Thursday, unchanged from the previous Thursday.