Global oil prices tumbled to fresh five-year low points this week, while gold won support from its status as a haven investment in times of economic unrest, traders said.
European stock markets slumped, dragged down by oil’s plunge and renewed concerns over the eurozone economy.
The European Central Bank (ECB) pumped more liquidity into the financial system on Thursday via private-sector loans, but analysts said uptake by banks was disappointing and increased pressure for it to do more.
The ECB said 306 banks had borrowed 129.8 billion euros (US$162 billion) under the second round of a lending program aimed at boosting the moribund eurozone economy and halting a stubborn drop in inflation.
By contrast, a strong US retail sales report reinforced investor confidence in the world’s largest economy. However, a stronger greenback on the back of upbeat US data added to pressure on commodities after US dollar-denominated raw materials were made more expensive for holders of rival currencies.
OIL: Prices notched up their latest troughs on Friday, after a gloomy crude demand downgrade from the International Energy Agency (IEA) and more weak Chinese economic data.
US benchmark West Texas Intermediate (WTI) for delivery next month plunged to US$57.34 per barrel — the lowest level since May 2009 — having already closed under the psychological level of US$60 on Thursday. Brent North Sea crude for January dived to US$61.35 in London deals, striking a low point last witnessed in July 2009.
The oil market — which has shed almost 50 percent since June — plumbed the latest lows after the Paris-based IEA slashed its demand outlook for next year, despite plunging prices.
Demand is set to grow by 0.9 million barrels a day to reach 93.3 million barrels, about 230,000 barrels less than the previous forecast, the IEA said in a report.
“Oil prices continue to dominate the markets as the IEA lowered oil demand expectations for the fourth time in five months,” IG analyst Alastair McCaig said.
Markets were also hit on Friday after China said industrial output expanded at its slowest pace in three months last month, while fixed-asset investment, a measure of government spending on infrastructure, was also easing.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month sank to US$62.11 a barrel compared with US$68.36 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for next month dived to US$58.15 a barrel from US$65.31 a week earlier.
PRECIOUS METALS: Gold began the week strongly before fading.
Gold “found support from the deterioration in risk appetite and also a weaker US dollar,” said Fawad Razaqzada, analyst at brokers Forex.com.
By late Friday on the London Bullion Market, the price of gold rose to US$1,217 an ounce from US$1,194 a week earlier.
Silver gained to US$17.07 an ounce from US$16.33.
On the London Platinum and Palladium Market, platinum stood at US$1,231 an ounce, unchanged from the previous week.
Palladium increased to US$818 an ounce from US$806.
BASE METALS: Base or industrial metals mainly slumped, dragged down by oil’s plunge and as a result of poorly-received Chinese economic data.
“Crude oil is the most important traded commodity by value and the largest component of commodity indices. It is natural therefore to think that short-term fluctuations in its price are likely to impact other commodities, including metals,” analysts at Macquarie financial group said in a note to clients.
By Friday on the London Metal Exchange, copper for delivery in three months edged up to US$6,467 a tonne from US$6,453 a week earlier.
Three-month aluminum declined to US$1,942 a tonne from US$1,991.25, while three-month lead dropped to US$1,989.50 a tonne from US$2,031.
Three-month tin grew to US$20,400 a tonne from US$20,325, while three-month nickel slid to US$16,471 a tonne from US$16,940 and three-month zinc fell to US$2,187 a tonne from US$2,238.75.
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