Sun, Jan 01, 2012 - Page 10 News List

Commodity markets fall and end year ‘with a whimper’


Global commodity prices mostly fell last year on worries the ongoing eurozone debt crisis and a potential global economic slowdown would hammer demand for raw materials.

“Commodity prices [ended] 2011 with a whimper,” said Capital Economics analyst Julian Jessop, noting that crude oil and gold were the only raw materials to register significant increases.

“This [was] a year of two parts for commodity markets, with broad-based strength in the first four months, led by oil, giving way to general weakness since May,” Jessop added.

OIL: Prices rose by about 13 percent in London and 9 percent in New York this year, but fell this week in volatile holiday-shortened trade before the New Year break.

Unrest in the crude-producing Middle East and North Africa region had sparked hefty price gains earlier this year amid the so-called Arab Spring.

London Brent oil surged as high as US$127.02 per barrel in April and New York crude hit a two-and-a-half year peak at US$114.83 in early May.

Prices soared after uprisings toppled the long-standing leaders of Tunisia, Egypt and Yemen, while unrest also rocked other parts of the oil-rich region — especially key crude producer Libya.

Libya was producing about 1.4 million barrels per day of mostly high-value light sweet crude before the uprising at the start of the year. About 85 percent of Libyan output was exported to Europe and the break in supply contributed to the surge in Brent prices.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in February dipped to US$107.02 a barrel compared with US$107.72 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for February stood at US$98.99 a barrel compared with US$99.63.

PRECIOUS METALS: Gold scored a record last year, but has since fallen heavily on profit taking and the stronger US dollar.

“The deepening of the sovereign crisis in Europe since mid-year has had a profound impact on investors’ risk appetite and there has been widespread liquidation across assets,” BNP Paribas analyst Anne-Laure Tremblay said. “Uncertainty means that key investors are largely remaining on the sidelines.”

Gold, which in September hit a record high above US$1,900 an ounce, has also tumbled in the final quarter of last year mainly due to a rising greenback.

A strong greenback makes US dollar-denominated commodities like gold more expensive for buyers holding rival currencies, denting demand and prices.

The precious metal still won more than 10 percent last year, after racking up a 30 percent gain in 2010.

By Friday on the London Bullion Market, gold sank to US$1,574.50 an ounce from US$1,607.54 the previous week.

Silver eased to US$28.18 an ounce from US$29.22.

On the London Platinum and Palladium Market, platinum fell to US$1,381 an ounce from US$1,436.

Palladium retreated to US$636 an ounce from US$653.

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