Sun, Aug 09, 2015 - Page 15 News List

Commodity prices slump to new lows

SURFEIT OF RICHES:Oil hit multi-month lows, while both precious and base metals hit multi-year lows, as did sugar, all weighed down by oversupply and a strong dollar


Oil, metals and sugar prices all slumped this week to new lows, weighed down by ample supplies and a strong US dollar, analysts said.

“Commodity prices have had a weak start to August as concerns about China’s demand continue to weigh on investor sentiment, particularly towards energy and industrial commodities,” Capital Economics research group said in a note to clients on Friday.

OIL: Prices hit multi-month lows on Friday, extending a prolonged losing run caused by a global supply glut.

Excess crude supply is seen as the main driver for a slump in oil price of more than 50 percent since the middle of last year.

Brent North Sea crude on Friday hit a six-month low at US$48.55 a barrel, while New York prices struck a 4.5-month trough at US$43.94.

“Crude oil prices continue to trade under significant pressure owing to ample global supplies and an unimpressive demand outlook,” Sucden Financial research senior analyst Kash Kamal said on Friday.

The US is producing oil from shale rock at high levels and output by OPEC continues to exceed the cartel’s quota of 30 million barrels a day as it seeks to maintain market share.

The US Department of Energy on Wednesday said crude stockpiles in the world’s top consumer slid 4.4 million barrels in the week through July 31, indicating robust demand.

However, it also showed US production rising by 52,000 barrels a day to 9.5 million barrels daily, rebounding from the previous week’s dip. The dollar, which remains strong despite falling on Friday on a mixed US jobs report, is also weighing on oil.

A strong dollar discourages crude purchases outside the US because oil is priced in the US currency.

Investors are also looking ahead to additional supplies of oil coming onto the market as part of last month’s historic deal between six major powers and Iran over its nuclear program.

In exchange for curbing its suspected nuclear activities, Tehran will see the lifting of sanctions, which have slashed its oil exports.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month slumped to US$49.02 a barrel from US$52.69 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for September slid to US$44.21 a barrel from US$47.66.

PRECIOUS METALS: Gold fell further, while platinum and palladium struck multi-year low points.

Platinum hit US$945.20 an ounce — the lowest level for five and a half years, while palladium dropped to an almost three-year trough at US$589.30 an ounce.

Silver managed a rise.

“The sentiment in gold and other metal markets has been turning increasingly negative during the past month,” Saxo Bank analyst Ole Hansen said.

“No signs of inflation combined with rising bond yields, collapsing emerging market currencies, no safe-haven demand, a rising dollar and rising expectations of an early US rate hike have all helped trigger an exodus out of gold,” he added.

By Friday on the London Bullion Market, the price of gold dipped to US$1,093.50 an ounce from US$1,098.40 a week earlier.

Silver climbed to US$14.75 an ounce from US$14.56.

On the London Platinum and Palladium Market, platinum slipped to US$946 an ounce from US$979.

Palladium dropped to US$602 an ounce from US$610.

BASE METALS: Prices remained pressured by more disappointing Chinese data.

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