Commodities prices were mixed on Thursday, with oil slightly down, but base metals and agricultural raw materials moved higher, following large drops in the two previous sessions amid concerns that the global economy is heading towards a major downturn.
Gold prices fell below $900 an ounce on profit taking, but the precious metal is still trading about 20 per cent higher than before Lehman Brother’s collapse.
Crude oil prices fell, but remained above the 11-month low hit on Wednesday as Opec, the oil cartel, mulled an emergency meeting to stop the slide in prices.
Nymex November West Texas Intermediate fell 49 cents to $88.46 a barrel, well above the $86.05 low it hit on Wednesday. ICE November Brent dropped $1.26 to $83.10 a barrel. Natural gas prices were slightly higher.
Members of the Opec oil cartel are considering an emergency meeting in Vienna next month as oil and other commodity prices dropped on Wednesday to their lowest level in almost a year.
Alarmed by the rapid fall in prices from a record high of $147.27 a barrel in July, almost half the cartel’s members have called for action to halt the slide before their next official meeting in Algeria in December. Opec’s next meeting was scheduled for December 17, but ministers are now saying they could meet on November 18 in Vienna, site of the group’s headquarters.
Olivier Jakob, of Swiss-based consultancy Petromatrix, said: “Be it in November or in December, be it formally or informally, Opec will need to reduce production not because the price is currently too low but because there is not enough demand.”
On Wednesday, the US Department of Energy reported the country’s oil demand averaged 18.66m barrels a day last week, down 8.6 per cent against the same period a year ago as the economic downturn takes its toll in oil consumption.
US crude stocks rose by 8.1m barrels last week, well above the consensus forecast for a rise of 2.3m barrels. US petrol demand weakened, averaging 8.77m b/d over the past four weeks, down 5.3 per cent year-on-year.
The Opec basket, a measure of the group’s oil prices, fell on Wednesday to $77.38 a barrel, below the $80 a barrel level that some members of the cartel have suggested is their minimum price.
Gold prices fell below $900 a troy ounce on profit taking in Asia as regional equities market recovered after several banks in the area, including Taiwan and South Korea cut interest rates. But traders said that investor demand was supporting the metal.
The world’s largest gold exchange-traded fund, the New York-listed SPDR Gold Trust, said its bullion holdings rose to a fresh record of 763.90 tonnes by late Wednesday, up 18.68 tonnes from Tuesday’s level.
Edel Tully, a strategist at Mitsui Precious Metals, said on Wednesday that the escalating plague that has attacked financial markets did not appear to be responding to its prescribed medication.
“We are quite optimistic that gold will see $1,000 once again in the current quarter, and sooner rather than later,” she said.
Key base metals were little changed after heavy losses on Wednesday. In early trading on the London Metals Exchange, aluminium was 0.4 per cent higher at $2,288 a tonne while copper was down 0.4 per cent at $5,330 a tonne.
But other base metals traded significantly higher on bargain buying. Tin jumped 2 per cent to $15,100 a tonne while lead was 3.1 per cent higher to $1,634 a tonne.
Agricultural commodities also recovered from earlier this week losses. CBOT December corn moved 7 cents higher to $4.34½ a bushel while CBOT November soyabean rose 12 cents to $9.76 a bushel. Wheat, sugar, cocoa and coffee were also higher on the day.
