Commodity prices retreat; metals remain dull

May 04, 2014- AFP

commodity-prices

 

The price of crude oil and metals came under pressure last week as investors took their lead from mixed updates on the US economy and the escalating Ukraine-Russia crisis.

OIL: Oil prices retreated on easing supply strains, despite a worsening situation over Ukraine. Ukraine, a major conduit for Russian natural gas exports to western Europe, is monitored closely by investors who are concerned that a full-scale armed conflict will disrupt supplies and send energy prices soaring.

Russia on Friday called an emergency UN Security Council meeting after at least seven people were killed in an Ukrainian military assault on the flashpoint town of Slavyansk, the deadliest day for months in the crisis. A furious Kremlin said the raid was “leading Ukraine towards catastrophe” and pronounced dead a peace deal struck in Geneva last month to ease the worst East-West confrontation since the Cold War.

Russian Prime Minister Dmitry Medvedev urged the western-backed leaders in Kiev to “stop killing their citizens”, saying the raid was “a sign of criminal helplessness”. Despite the unrest, oil prices were weighed down by official data showing that US crude oil stockpiles last week rose by 1.7 million barrels to 339.4 million-the highest weekly level since 1982 – indicating weaker demand in the world’s largest economy.

That came a day after official data showed the US economy grew just 0.1 percent year-on-year in the first three months of 2014, much slower than the 2.6 percent in the previous quarter and well short of forecasts. However, research house Capital Economics noted that the US Federal Reserve’s statement on the economy “takes a more upbeat tone than the one issued after the last meeting in mid-March”. Wednesday’s statement said the economy had “picked up” after a bout of fierce winter weather.

And on Friday, official data showing that the US economy pumped out 288,000 jobs in April, the highest pace in more than two years. The unemployment rate tumbled to 6.3 percent from 6.7 percent, the lowest level since September 2008. Further downward pressure to oil prices came this week from an expected resumption of oil exports from the Zueitina port of Libya, a key export hub that has been shut down by protests for months.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June fell to $108.71 a barrel from $109.46 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for June dropped to $99.93 a barrel compared with $100.76 for the May contract on Thursday of the previous week.

PRECIOUS METALS: Gold and silver retreated, hit by the Fed’s scaling back of its huge stimulus programme. “Precious metals are losing their attractiveness as a safe haven despite the Ukraine crisis,” noted analysts at Commerzbank in a client report.

By Friday on the London Bullion Market, the price of gold slipped to $1,281.25 an ounce from $1,301.25 on Thursday of the previous week. Silver decreased to $19.17 an ounce from $19.66. On the London Platinum and Palladium Market, platinum increased to $1,425 an ounce from $1,418. Palladium gained to $816 an ounce from $805.

BASE METALS: Prices fell across the board, weighed down also by strains to the Chinese economy. Although China’s manufacturing activity improved in April, showing increased strength for a second straight month, analysts cautioned over the latest data. “We do not believe the economy has passed a turning point,” said Nomura economist Zhang Zhiwei. Thursday’s data, the first official reading on the world’s second-largest economy in the current second quarter, came after China’s economic growth for the first three months of 2014 came in at its weakest pace in 18 months. By Friday on the London Metal Exchange, copper for delivery in three months fell to $6,648 a tonne from $6,766.25 a week earlier.

— Three-month aluminium dropped to $1,775.25 a tonne from $1,856.

— Three-month lead slipped to $2,078.25 a tonne from $2,162.75.

— Three-month tin decreased to $22,930 a tonne from $23,700.

— Three-month nickel retreated to $18,150 a tonne from $18,409.

— Three-month zinc declined to $2,012 a tonne from $2,060.50.

COFFEE: Arabica-quality coffee fell from 26-month high points on profit-taking, though a tight supply situation in major producer Brazil continued to support prices. By Friday on the ICE Futures US exchange, Arabica for delivery in July fell to 204.65 US cents a pound from 211.15 cents a week earlier. On Liffe, London’s futures exchange, Robusta for July rose to $2,163 a tonne from $2,156.

SUGAR: Prices diverged over the week. By Friday on Liffe, the price of a tonne of white sugar for delivery in August declined to $476.30 from $479 a week earlier. On ICE Futures US, the price of unrefined sugar for July grew to 17.79 US cents a pound from 17.33 US cents.

COCOA: Futures fell to their lowest levels since February, after a recent run higher due to concerns about stretched supplies. By Friday on Liffe, cocoa for delivery in July dropped to £1,816 a tonne from £1,857 a week earlier. On ICE Futures US, cocoa for July retreated to $2,914 a tonne from $2,973.

RUBBER: Prices in Kuala Lumpur rebounded after being hit in recent weeks by slack Chinese demand. The Malaysian Rubber Board’s benchmark SMR20 rose to 173.90 US cents a kilo from 170.85 cents a week earlier.

May 04, 2014- AFP

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