Oil prices dive after recent record soaring
Sunday, 1 June 2008
LONDON, May 31 (AFP): Oil prices sank the past week further from record soaring above 135 dollars a barrel as concerns eased over tight supplies, high demand and as the dollar recovered. Metals slumped in oil's wake, traders said.
Oil: The price of crude slid on profit-taking as traders reacted to the strong dollar, which discourages demand for goods priced in the US unit because they became more expensive for foreign buyers.
The market staged a modest rally late Friday as bargain hunters snapped up oil ahead of the weekend.
However, prices have fallen heavily over the past five days after a record-breaking run that saw crude surge beyond 135 dollars last week on concerns about stretched energy supplies.
The US government's Energy Information Administration (EIA) said American crude reserves sank 8.8 million barrels in the week ending May 23 while gasoline reserves dived by 3.2 million barrels.
British Prime Minister Gordon Brown warned Wednesday the world was facing a "great oil shock" that needed a comprehensive international strategy to address.
Analysts said recent speculative oil trading had been driven by tight global supplies, the weak dollar, and unrest in key crude producers like Nigeria, and OPEC's unwillingness to boost output.
Precious Metals: Gold, silver, platinum and palladium all fell as the dollar rallied.
"Given the improved dollar sentiment and the general view that commodities are perhaps a little overbought it's likely that short-term (price) sentiment will remain bearish (weak)," said James Moore of the LondonBullionDesk.com.
Meanwhile sliding oil prices reduced concerns about inflation, discouraging investors from buying gold, which is widely regarded as a good store of value.
On the London Bullion Market, gold dropped to 885.75 dollars per ounce at Friday's late fixing from 927.50 dollars a week earlier.
Silver declined to 16.85 dollars per ounce from 18.10 dollars.
On the London Platinum and Palladium Market, platinum slipped to 2,008 dollars per ounce at the late fixing Friday from 2,182 dollars a week earlier. Palladium reclined to 430 dollars per ounce from 451 dollars.
Base Metals: Base metals prices slumped, with nickel and zinc reaching fresh two-year lows.
"A few things have come together at the same time" to create lower prices, said BNP Paribas analyst David Thurtell.
By Friday, copper for delivery in three months fell to 7,925 dollars per tonne on the London Metal Exchange from 8,200 dollars a week earlier.
Three-month aluminium dropped to 2,923 dollars per tonne from 2,988 dollars. Three-month nickel slid to 22,187 dollars per tonne from 23,510 dollars. Three-month lead decreased to 1,950 dollars per tonne from 2,020 dollars. Three-month zinc declined to 1,991 dollars per tonne from 2,143 dollars. Three-month tin slumped to 22,187 dollars per tonne from 23,510 dollars.
Cocoa: Cocoa prices rebounded after striking five-week lows the previous week in London.
"Concerns mounted that a reported decline in levels of fertiliser and pesticide usage in the Ivory Coast may lead to an increased vulnerability of the 2008/09 cocoa crop to yield- reducing diseases alongside reduced output," said analysts at Barclays Capital.
"Cocoa prices invariably overreact to news from the Ivory Coast, and reports of continued positive weather conditions in the region still support the prospect of a strong crop in the 2008/09 harvest," they added.
Sugar: Sugar prices fell further owing to robust supplies.
By Friday on LIFFE, the price per tonne of white sugar for August delivery dropped to 320 pounds from 326 pounds the previous week.
On NYBOT, the price of unrefined sugar for July delivery reversed to 9.82 US cents per pound from 10.24 cents.
Grains and Soya: Maize and soya prices fell as oil futures slumped.
"There has been a very tight correlation between crude oil futures and soybean oil futures. The crude weakness also spills into the corn (maize) contract," said Allendale analyst Joe Victor.
Maize and soya are used to produce ethanol, which is a cheaper alternative to gasoline (petrol). Brazil is a major producer and consumer of ethanol used to power vehicles.
By Friday on the Chicago Board of Trade, maize for July delivery dropped to 5.90 dollars per bushel from 5.99 dollars the previous week.
July-dated soyabean meal-used in animal feed-slid to 13.36 dollars from 13.68 dollars.
Wheat for July delivery rose to 7.54 dollars per bushel from 7.52 dollars.
Rubber: Rubber prices continued to rise on concerns over a supply shortage.
Oil: The price of crude slid on profit-taking as traders reacted to the strong dollar, which discourages demand for goods priced in the US unit because they became more expensive for foreign buyers.
The market staged a modest rally late Friday as bargain hunters snapped up oil ahead of the weekend.
However, prices have fallen heavily over the past five days after a record-breaking run that saw crude surge beyond 135 dollars last week on concerns about stretched energy supplies.
The US government's Energy Information Administration (EIA) said American crude reserves sank 8.8 million barrels in the week ending May 23 while gasoline reserves dived by 3.2 million barrels.
British Prime Minister Gordon Brown warned Wednesday the world was facing a "great oil shock" that needed a comprehensive international strategy to address.
Analysts said recent speculative oil trading had been driven by tight global supplies, the weak dollar, and unrest in key crude producers like Nigeria, and OPEC's unwillingness to boost output.
Precious Metals: Gold, silver, platinum and palladium all fell as the dollar rallied.
"Given the improved dollar sentiment and the general view that commodities are perhaps a little overbought it's likely that short-term (price) sentiment will remain bearish (weak)," said James Moore of the LondonBullionDesk.com.
Meanwhile sliding oil prices reduced concerns about inflation, discouraging investors from buying gold, which is widely regarded as a good store of value.
On the London Bullion Market, gold dropped to 885.75 dollars per ounce at Friday's late fixing from 927.50 dollars a week earlier.
Silver declined to 16.85 dollars per ounce from 18.10 dollars.
On the London Platinum and Palladium Market, platinum slipped to 2,008 dollars per ounce at the late fixing Friday from 2,182 dollars a week earlier. Palladium reclined to 430 dollars per ounce from 451 dollars.
Base Metals: Base metals prices slumped, with nickel and zinc reaching fresh two-year lows.
"A few things have come together at the same time" to create lower prices, said BNP Paribas analyst David Thurtell.
By Friday, copper for delivery in three months fell to 7,925 dollars per tonne on the London Metal Exchange from 8,200 dollars a week earlier.
Three-month aluminium dropped to 2,923 dollars per tonne from 2,988 dollars. Three-month nickel slid to 22,187 dollars per tonne from 23,510 dollars. Three-month lead decreased to 1,950 dollars per tonne from 2,020 dollars. Three-month zinc declined to 1,991 dollars per tonne from 2,143 dollars. Three-month tin slumped to 22,187 dollars per tonne from 23,510 dollars.
Cocoa: Cocoa prices rebounded after striking five-week lows the previous week in London.
"Concerns mounted that a reported decline in levels of fertiliser and pesticide usage in the Ivory Coast may lead to an increased vulnerability of the 2008/09 cocoa crop to yield- reducing diseases alongside reduced output," said analysts at Barclays Capital.
"Cocoa prices invariably overreact to news from the Ivory Coast, and reports of continued positive weather conditions in the region still support the prospect of a strong crop in the 2008/09 harvest," they added.
Sugar: Sugar prices fell further owing to robust supplies.
By Friday on LIFFE, the price per tonne of white sugar for August delivery dropped to 320 pounds from 326 pounds the previous week.
On NYBOT, the price of unrefined sugar for July delivery reversed to 9.82 US cents per pound from 10.24 cents.
Grains and Soya: Maize and soya prices fell as oil futures slumped.
"There has been a very tight correlation between crude oil futures and soybean oil futures. The crude weakness also spills into the corn (maize) contract," said Allendale analyst Joe Victor.
Maize and soya are used to produce ethanol, which is a cheaper alternative to gasoline (petrol). Brazil is a major producer and consumer of ethanol used to power vehicles.
By Friday on the Chicago Board of Trade, maize for July delivery dropped to 5.90 dollars per bushel from 5.99 dollars the previous week.
July-dated soyabean meal-used in animal feed-slid to 13.36 dollars from 13.68 dollars.
Wheat for July delivery rose to 7.54 dollars per bushel from 7.52 dollars.
Rubber: Rubber prices continued to rise on concerns over a supply shortage.