Sun, Apr 14, 2013 - Page 15 News List

Lower demand forecasts push oil to eight-month low

GOLDRUSH:Commodities were mixed this week, with gold dropping amid talk of Cyprus selling US$697m in reserves and coffee rising as a tree fungus hit crops


Brent crude oil sank this week to an eight-month low, hit by the poor outlook after a raft of demand forecast downgrades and in line with the stronger US dollar, analysts said.

Precious metal gold also dived to under US$1,500 per ounce, reaching its lowest level since July 2011 on the back of speculation that Cyprus could sell reserves.

Other commodities turned in a mixed performance as traders also eyed the latest developments on the Cyprus debt crisis.

EU finance ministers formally approved the terms of a Cyprus bailout on Friday, after some confusion over whether it needed revision, saying it could now go ahead once cleared by national parliaments.

OIL: London’s Brent North Sea crude slumped on Friday to US$102.12 per barrel, which was the lowest point since July 13 last year.

The market was rocked by forecast downgrades for this year from OPEC, the International Energy Agency and the US Energy Information Administration.

Crude futures fell on Thursday after the agency projected that global oil demand would grow by 795,000 barrels per day to a total of 90.6 million barrels a day this year.

The figure is slightly lower than its previous outlook, as a fall in European demand partially offset growth elsewhere.

“Perhaps the most significant element of all three reports has been demand pessimism, implying doubts about global GDP growth this year,” PVM oil analyst David Hufton said.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month tumbled to US$102.12 a barrel from US$104.82 the previous week.

On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month slid to US$91.19 a barrel from US$92.27.

PRECIOUS METALS: Gold tumbled as low as US$1,492.68 ounce on Friday, hit by the strong US dollar and speculation over the sale of Cyprus reserves.

“Cyprus holds 13.9 tonnes of gold valued at US$697 million. The European Commission assessment earmarked 400 million euros [US$520 million] of gold for disposal, the equivalent of 10.4 tonnes,” Barclays analyst Suki Cooper said.

The US dollar strengthened after minutes to the latest US Federal Reserve policy meeting showed an increase in sentiment toward reeling in its quantitative easing bond-buying this year.

The stronger greenback makes US dollar-priced raw materials more expensive for buyers using other currencies.

By late Friday on the London Bullion Market, the price of gold eased to US$1,535.50 an ounce from US$1,568 the previous week.

Silver rose to US$27.40 an ounce from US$26.97.

On the London Platinum and Palladium Market, platinum dipped to US$1,514 an ounce from US$1,531, while palladium reversed to US$715.50 an ounce from US$720.

COFFEE: Prices advanced as a tree fungus in Central America continued to hit crops.

“In its latest monthly report, the International Coffee Organization writes that the crops lost to the Roya fungus in Central America will be offset by higher production in other countries such as Brazil, Indonesia and Ethiopia,” Commerzbank analysts said. “The fungal disease threatens to reduce the harvest in the affected countries by at least 2.3 million bags in total.”

Leaf rust causea coffee trees to produce fewer, lower-quality beans.

By Friday on LIFFE, Robusta for delivery in July rose to US$2,056 per tonne from US$2,003 for the May contract the previous week.

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