Most commodity prices fell this week after a surprisingly bad labor report in the US, which is a top consumer of many raw materials, while Brent oil also struck a five-month low on fears of a supply glut.
The US labor market was far weaker than expected last month, with the economy adding only 88,000 jobs, a third of the number in February, official data showed on Friday.
Job creation slumped to its weakest level since June last year and was far below the 192,000 jobs that analysts had expected. The total number of unemployed persons was little changed at 11.7 million.
The unemployment rate dipped in March to 7.6 percent — the lowest since December 2008 — from 7.7 percent in February as more people dropped out of the work force.
Investors also kept a close watch this week on the Korean Peninsula, where tension has risen to a high level amid a standoff that pits North Korea against South Korea and its main ally, the US.
Added to the picture, traders digested a new raft of monetary easing measures from the Bank of Japan.
OIL: London Brent prices plunged on Friday to US$104.20 per barrel — which was the lowest point since August last year — and New York crude hit a two-week trough at US$92.15.
“Prices have fallen dramatically over the last three days, shedding value in response to poor economic data from the US, with US companies just adding 88,000 jobs,” energy analyst Joe Conlan at British-based energy consultancy Inenco said.
“This was far worse than economists had predicted. The falls may have been greater had it not been for news from the Bank of Japan that they were launching a massive injection of capital into the economy,” he said.
“Not even the threat of military action on the Korean Peninsula has stopped the slide in the oil markets, with technical indicators pointing to a price around or just under US$100 per barrel,” he added.
Prices were also under pressure on the back of stubborn concerns over plentiful US supplies.
The market had dived by about US$3 a barrel on Wednesday after the US government’s Energy Information Administration revealed that US crude reserves rose 2.7 million barrels to 388.6 million barrels.
That was almost double market expectations for an increase of 1.5 million barrels, and sent total stocks to the highest level since July 1990. Surging US inventories signal weaker demand and tends to put downward pressure on prices.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in May decreased to US$104.82 a barrel from US$109.42 on Thursday last week.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May slid to US$92.27 a barrel from US$96.67.
PRECIOUS METALS: Gold fell to its lowest point since May last year, punished by the strong dollar, but clawed back ground on Friday as payrolls data stoked expectations that the US Federal Reserve would continue with its quantitative easing (QE) stimulus.
“Gold rallied following the release of the figure. Another second-quarter downturn in the US economy is actually positive for those who want the Fed’s QE3 program to continue,” Alpari analyst Craig Erlam said.
“Gold, as an inflation hedge, tends to be one of the biggest beneficiaries of more QE, so this reaction clearly suggests that traders believe QE3 is here to stay,” he said.