World oil prices tumbled close to six-year lows this week, as record-high US crude inventories deepened worries over the global supply glut.
In another blow, official data on Friday showed that the US economy slowed sharply in the fourth quarter of last year, sparking fears over demand in the US, which is the world’s biggest oil consumer.
OIL: New York crude oil dived on Thursday to US$43.58 per barrel, striking a nadir last seen on March 12, 2009.
Prices plunged after official data on Wednesday showed that US crude stockpiles surged by 8.9 million barrels to 406.7 million in the week to Jan. 23.
The overall level of stockpiles was the highest since the US government began keeping weekly records in 1982.
Meanwhile, data on Friday showed that US GDP grew at an annual rate of 2.6 percent in the fourth quarter. That marked a steep decline from the brisk 5.0 percent growth in the third quarter.
“Weaker than expected US GDP numbers reinforce the perception that we are seeing a little bit of a slowdown in the pace of the US recovery,” CMC Markets analyst Michael Hewson said.
“With oil storage at record levels, this suggests that demand is likely to remain weak, and thus exert further limitations on the ability of the oil price to rebound, suggesting we could well see a gradual move towards the US$40 level,” he said.
In reaction to the US inventories data, meanwhile, WTI dropped US$1.78 and Brent lost US$1.13 on Wednesday.
Sucden analyst Myrto Sokou added that the weekly US energy report “indicated a prolonged deterioration in oil fundamentals” of supply and demand.
The oil market has lost more than half its value since June last year, when crude was sitting at more than US$100 a barrel, due to a supply glut, boosted largely by robust US shale oil production and weak global demand.
The problem was exacerbated in November last year after the OPEC oil cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 percent of global crude.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in March edged up to US$49.65 a barrel from US$49.55 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for March dipped to US$45.35 a barrel compared with US$46.91.
PRECIOUS METALS: Gold fell sharply as the European Central Bank’s (ECB) recent stimulus announcement eclipsed the impact of the Greek election, analysts said.
“The recent softness can be explained by stronger appetite for riskier assets, notably European equities, following the announcement of bolder-than-expected easing by the ECB and the failure of the elections in Greece to trigger an immediate crisis there,” Capital Economics analyst Julian Jessop said.
Anti-austerity party Syriza won Greece’s elections on Sunday last week, sparking fears that the country could end up exiting the eurozone.
However, it could lift gold in the longer term, because the precious metal is regarded as a safe investment in times of geopolitical or economic turmoil.
“Whether or not Greece ultimately exits the euro, we expect the price of gold to be boosted further this year by the return of safe-haven demand as the country’s financial problems drag on,” Jessop added.
By Friday on the London Bullion Market, the price of gold slid to US$1,260.25
an ounce from US$1,294.75 a week earlier.
Silver sank to US$16.92 an ounce from US$18.23.
On the London Platinum and Palladium Market, platinum fell to US$1,221 an ounce from US$1,274.
Palladium advanced to US$775 an ounce from US$767.
BASE METALS: Copper slumped to US$5,339.50 — the lowest level since July 22,
2009 — as worries intensified over the state of Chinese demand, dealers said.
“Pressure on copper prices from Chinese traders remains high,” Commerzbank analysts said. “The selling pressure has doubtless been triggered by fears that financing transactions secured by copper may be wound up. Concerns about China’s economic slowdown are also likely to have played their part.”
By Friday on the London Metal Exchange, copper for delivery in three months slid to US$5,468 a tonne from US$5,559 the previous week.
Three-month aluminum rose to US$1,863.50 a tonne from US$1,835.50.
Three-month lead was unchanged at US$1,845 per tonne.
Three-month tin declined to US$19,250 a tonne from US$19,440.
Three-month nickel firmed to US$14,720 a tonne from US$14,500.
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