Oil prices extended their slide this week, kicking off the new year with 5.5-year low points, as tepid eurozone demand offset a pickup in the US economy.
The US dollar rose, hitting demand for commodities like crude and metals priced in the currency.
OIL: Oil prices slumped to the new lows on Friday — the first trading day of the year — over signs of weak manufacturing output in Europe.
Photo: Bloomberg
West Texas Intermediate (WTI) for delivery next month struck US$52.03 a barrel and Brent North Sea crude tumbled to US$55.48, the lowest levels since mid-2009.
“With global manufacturing weakening from China to the USA to Europe, and Russia and Iraq making production gains, for oil the New Year is much the same as the old year: abysmal,” Spreadex analyst Connor Campbell said.
WTI lost 46 percent of its value last year and Brent was down 48 percent, with most of the freefall happening since June last year, when prices were above US$100.
Rising US and Canadian oil production has contributed to ample global supplies at a time of slowing growth in China and other emerging market economies, a recession in Japan and a near-stall in the 18-nation eurozone.
A decision last month by OPEC to leave output unchanged despite the price plunge also rattled the market, adding pressure on prices.
Phillip Futures investment analyst Daniel Ang pointed to expectations for a price rebound this year. He said the supply glut could be alleviated by current low oil prices affecting “existing shale oil rigs, causing them to shut off, keeping US crude oil production in check.”
“In 2015, we believe that crude demand would be linked to how China, Japan and the eurozone perform,” Ang added.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for next month slumped to US$57.02 a barrel from US$60.23 on Wednesday the previous week.
On the New York Mercantile Exchange, WTI or light, sweet crude, fell to US$53.49 from US$55.89.
PRECIOUS METALS: Gold fell slightly over the week, benefitting from its status as a safe haven investment amid Greece’s political woes, while coming under pressure from a firmer US dollar.
“Gold had a relatively stable, if uninspired, end to 2014, as oil drew most of the focus in the commodity sector,” Campbell said.
Greece’s parliament was dissolved Wednesday ahead of an early election watched warily by markets and international creditors concerned that the austerity-weary country could start unwinding unpopular fiscal reforms.
Greek Prime Minister Antonis Samaras has said the financially-stricken nation may be forced out of the eurozone if the election is won by radical leftist party SYRIZA, which has vowed to reverse years of austerity.
By Friday on the London Bullion Market, gold fell to US$1,172 an ounce from US$1,177 on Wednesday last week, while silver slipped to US$15.71 from US$15.77.
On the London Platinum and Palladium Market, platinum dipped to US$1,193 an ounce from US$1,199. as Palladium decreased to US$791 an ounce from US$809.
COCOA: Cocoa futures dropped on the prospect of higher output.
“The crops in West Africa are still thought to be big this year and have changed ideas of a shortage of production into ideas of a small surplus,” Price Futures Group analyst Jack Scoville said.
By Friday on LIFFE, London’s futures exchange, cocoa for May fell to ￡1,977 a tonne from ￡1,996 on Wednesday last week.
On the ICE Futures US exchange, cocoa for March dropped to US$2,915 a tonne from US$2,978.
SUGAR: Sugar prices dropped.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in March retreated to US$380.60 from US$391.50 on Wednesday last week.
On ICE Futures US, unrefined sugar for March fell to US$0.1425 a pound (0.45kg) from US$0.1481.
COFFEE: Coffee prices retreated.
By Friday on ICE Futures US, arabica for delivery in March slid to US$0.16130 a pound from US$0.17185 on Wednesday the previous week.
On LIFFE, robusta for March declined to US$1,871 a tonne from US$1,883.
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