Commodities spiraled lower again yesterday with crude oil sliding a further US$5 as concerns about a slowdown in global growth sent traders rushing for the exit for the seventh successive session.
Crude oil again suffered the deepest losses amid widespread selling of silver, industrial metals and grains as worries over global growth in a market ripe for profit taking combined to cause a widespread rout.
Brent crude tumbled as much as 5.1 percent to a low of US$105.15 a barrel. Unrest across Arab nations had helped spur investors to pile into oil since the start of the year, driving Brent to a two-and-a-half year high of US$127 last month.
Brent has lost more than 12 percent since Wednesday’s close, the biggest two-day fall since the global financial crisis over two years ago
“People are waking up to a whole new world. This is part of the adjustment process,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. “The volatility will stay with us for some time.”
Brent fell by a record US$12 at one point during Thursday’s bloodbath, the second-biggest drop on record.
US crude also lost more than US$5 to a low of US$94.63.
“From here I would expect some form of stability, trading sideways maybe, but if we break through the lows of last night I think we’re definitely looking at US$90 and possibly worse,” said Sean Corrigan, chief investment strategist at Diapason -Commodities -Management in Switzerland.
Silver was down as much as 2 percent to US$34.23 an ounce, while gold retained its safe-haven status, rising nearly 1 percent.
Some pointed to silver, which dropped almost US$5 an ounce on Thursday for its biggest one-day drop since 1980, as showing the risks of holding frothy commodities, especially after margins on trading COMEX silver futures have risen so sharply.
Silver hit a record high on April 28 close to US$50, but has since slumped almost 30 percent, an uncomfortable reminder of the panic selling in 1980 when an attempt to corner the market by two Texas oil tycoons fell apart.
Jitters over global economic growth was the spark for the commodities sell-off that pushed the 19-commodity Thomson Reuters-Jefferies CRB Index down 5 percent on Thursday for its fifth biggest one-day fall on record.
US JOB DATA
Investors shifted their focus to US jobs data that was due later yesterday to gauge if concerns over the health of the world’s biggest economy are misplaced or not.
Global manufacturing growth eased in April, JP Morgan said, and the services sectors in both the US and Europe cooled, adding to data that suggests some faltering in the world’s recovery from the global financial crisis.
Fears about a slowdown in economic growth and tightening in the biggest metals consumer China hit copper and other industrial metals again.
Three-month copper on the London Metal Exchange gave up nearly 1 percent to US$8,730 a tonne, zinc shed 1.6 percent and tin fell 2.1 percent.
Copper’s weak fundamentals also weighed on its performance as investors worried about high inventories in Chinese bonded warehouses.
Grains again joined the weakness. US.corn futures fell more than 2 percent in late Asian trading and wheat shed 1.8 percent.