LONDON, Aug 14, (AFP): Crude oil prices plunged this week as traders fretted that a global economic slowdown could dent energy demand, but gold hit a one-month high as many investors sought a safe-haven for their cash.
Elsewhere, wheat came off last week’s two-year highs reached following news that major exporter Russia had banned grain exports after a record drought ravaged crops.
Most financial markets were battered this week, triggered by a warning Tuesday by the US Federal Reserve that the US recovery would be weaker than anticipated, forcing investors onto the defensive. Slowing growth in China, the Asian powerhouse which has kept the global economy above water in the past 18 months, added to the damage.
The United States and China are the world’s top two energy-consuming nations and are both major buyers of all raw materials.
“Oil prices retreated this week amid renewed concerns over the fragile global economic recovery as disappointing economic data from China and the US dampened ... risk appetite and prompted investors to lock in recent profits,” said Sucden analyst Myrto Sokou.
Oil: Prices dived under $76 as the market was slammed by growing pessimism over the economic outlook despite upbeat growth data in Europe.
“The ghosts of a global economic slowdown are back and haunting the oil market again,” Barclays Capital analyst Amrita Sen said in a note. She added: “With sentiment having taken a significant turn for the worse, oil prices remain under considerable pressure, with even some extremely strong European figures failing to boost confidence.”
Data showed on Friday that the German economy grew 2.2 percent in the second quarter of 2010, the biggest quarterly expansion since reunification in 1990. In addition, economic growth across Europe’s core euro currency zone hit 1.0 percent in the second quarter.
On Thursday, a surprise rise in the new US weekly jobless benefit claims added to increasing gloom over the economic outlook.
Meanwhile on Friday, the Organization of Oil Exporting Countries (OPEC) revised upwards its world oil demand growth estimate for 2010 to 1.2 percent. OPEC warned however that slower economic growth in the second half of the year, caused by a phasing out of fiscal stimulus, would likely affect demand. By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in September tumbled to $75.58 a barrel from $81.91 the previous week. On London’s Intercontinental Exchange, Brent North Sea crude for September nose-dived to $75.28 compared with $81.30.
Grains and Soya: Wheat prices steadied after striking a two-year peak late last week when Russia decided to ban exports until the end of 2010.
Wheat soared to $8.68 a bushel (about 25 kilogrammes) on Friday, Aug 6, for the December contract — the highest level since August 2008.
The commodity was also lifted this week after the US Department of Agriculture (USDA) forecast lower wheat and maize production for 2009/2010. By Friday on the Chicago Board of Trade, wheat for delivery in December had eased to $7.48 a bushel from $7.55 the previous week. Maize for December rose to $4.28 a bushel from $4.20. November-dated soyabean meal — used in animal feed — increased to $10.42 from $10.33.
Precious Metals: Gold struck a one-month high at $1,217.65 per ounce, garnering support from its safe-haven status.
By late Friday on the London Bullion Market, gold advanced to $1,214.25 an ounce from $1,207.75. Silver eased to $18.06 an ounce from $18.30.
On the London Platinum and Palladium Market, platinum dipped to $1,527 an ounce from $1,571.
Palladium decreased to $473 an ounce from $491.
Base Metals: Base or industrial metals mostly fell on concerns that demand will suffer in the months ahead.
By late Friday on the London Metal Exchange, copper for delivery in three months fell to $7,227 a tonne from $7,421.
Three-month aluminium dipped to 2,144 dollars a tonne from $2,215.
Three-month lead slid to $2,095 a tonne from $2,198.
Three-month tin firmed to $20,650 a tonne from $20,600.
Three-month zinc eased to $2,057 a tonne from $2,136.
Three-month nickel dropped to $21,500 a tonne from $22,140.
Coffee: Coffee futures soared within a whisker of recent multi-year peaks, driven by keen demand from speculators.
On the New York Board of Trade (NYBOT), Arabica for September rose to 177.35 US cents a pound from 169.25 cents.
Cocoa: Cocoa prices lost ground.
By Friday on LIFFE, cocoa for delivery in December sank to 2,043 pounds a tonne from 2,202 pounds for the September contract the previous week.
On NYBOT, the December cocoa contract dropped to 2,894 dollars a tonne from 2,996 dollars for the September contract.
Sugar: Sugar futures moved higher.
By Friday on NYBOT, the price of unrefined sugar for delivery in October increased to 18.96 US cents a pound from 18.33 cents. On LIFFE, the price of a tonne of white sugar for October rose to 550.10 pounds from 543 pounds.
Rubber: Malaysian rubber prices drifted lower in subdued trade.
The Malaysian Rubber Board’s benchmark SMR20 contract fell to 301.40 US cents per kilo from 302.65 cents.
