Brent crude oil sank last week to an eight-month low, hit by the poor outlook after a raft of demand forecast downgrades and in line with the stronger dollar, analysts said. Precious metal gold meanwhile dived under $1,500 per ounce, reaching the lowest level since July 2011 on the back of speculation that Cyprus could sell reserves.
Other commodities turned in a mixed performance as traders also eyed the latest developments on the Cyprus debt crisis. Eurozone finance ministers formally approved the terms of a Cyprus bailout on Friday, after some confusion over whether it needed revision, saying it could now go ahead once cleared by national parliaments.
OIL: London's Brent North Sea crude slumped on Friday to $102.12 per barrel, which was the lowest point since July 13, 2012. "Oil prices have dropped to reach their lowest levels for over eight months during the week, falling to below $103 per barrel for the first time since July 2012," said Inenco analyst Gary Hornby.
"Prices have come under pressure as oil demand forecasts for the rest of 2013 have been lowered by three major industry bodies within the past few days, citing a worsening economic outlook in the eurozone as a key factor. "In addition, US oil stockpiles continue to swell, and are now close to record high levels, due to US oil production increases as well as US oil refineries carrying out annual maintenance."
The market was rocked by forecast downgrades for 2013 from the Organisation of Petroleum Exporting Countries (Opec), the International Energy Agency (IEA) and the US government's Energy Information Administration.
Crude futures fell Thursday after the IEA projected that global oil demand would grow by 795,000 barrels per day to a total of 90.6 million barrels a day in 2013. The figure is slightly lower than its previous outlook, as a decline in European demand partially offset growth elsewhere.
"Perhaps the most significant element of all three reports has been demand pessimism, implying doubts about global GDP (economic) growth this year," noted PVM oil analyst David Hufton. "Opec forecasts that global demand will grow by 800,000 barrels per day (bpd) this year and the IEA is of the same opinion.
He added: "The IEA believes that European oil demand is particularly weak suggesting that this year it will be 'the lowest since the 1980s'. "Hence oil prices retreated ... in the face of all of this demand pessimism." By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in May tumbled to $102.12 a barrel from $104.82 the previous week. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May slid to $91.19 a barrel from $92.27.
PRECIOUS METALS: Gold tumbled as low as $1,492.68 ounce on Friday, hit by the strong dollar and speculation over the sale of Cyprus reserves. The dollar strengthened after minutes to the latest Federal Reserve policy meeting showed an increase in sentiment toward reeling in its QE bond-buying this year.
The stronger greenback makes dollar-priced raw materials more expensive for buyers using other currencies. That tends to weigh on demand and prices. "Gold prices have endured further pressure amid hawkish Fed minutes and news that Cyprus may sell its excess gold reserves to help meet some of its bailout costs," said Barclays analyst Suki Cooper. She added: "Cyprus holds 13.9 tonnes of gold valued at $697 million. The European Commission assessment earmarked 400 million euros ($520 million) of gold for disposal, the equivalent of 10.4 tonnes." By late Friday on the London Bullion Market, the price of gold eased to $1,535.50 an ounce from $1,568 the previous week. Silver rose to $27.40 an ounce from $26.97. On the London Platinum and Palladium Market, platinum dipped to $1,514 an ounce from $1,531. Palladium reversed to $715.50 an ounce from $720.
BASE METALS: Base or industrial metal prices fell amid jitters over the strength of demand from key consumer China. "Copper moved lower on concerns that recent increases in supply will not be matched by Chinese demand," noted CMC Markets analyst Matt Basi. By Friday on the London Metal Exchange, copper for delivery in three months slipped to $7,384 a tonne from $7,421 the previous week.
---- Three-month aluminium retreated to $1,854 a tonne from $1,888.
---- Three-month lead declined to $2,029 a tonne from $2,067.
---- Three-month tin dropped to $22,000 a tonne from $22,800.
---- Three-month nickel reversed to $15,918 a tonne from $16,065.
---- Three-month zinc slipped to $1,853 a tonne from $1,887.
COCOA: Cocoa futures advanced despite expectations of a large crop from top global producer Ivory Coast. The price gains were "remarkable given that Ivory Coast is expected to produce an above-average mid-crop despite the long period of overly dry weather", wrote Commerzbank analysts in a note to clients.
By Friday on Liffe, London's futures exchange, cocoa for delivery in July climbed to £1,487 a tonne from £1,430 for the May contract a week earlier. On New York's NYBOT-ICE exchange, cocoa for July rose to $2,243 a tonne from $2,127 for the May contract a week earlier.
COFFEE: Prices advanced as a tree fungus in Central America continued to hit crops. "In its latest monthly report, the International Coffee Organisation (ICO) writes that the crops lost to the Roya fungus in Central America will be offset by higher production in other countries such as Brazil, Indonesia and Ethiopia," said Commerzbank analysts.
"The fungal disease threatens to reduce the harvest in the affected countries by at least 2.3 million bags in total." Leaf rust has caused coffee trees to produce fewer and lower-quality beans. By Friday on Liffe, Robusta for delivery in July rose to $2,056 per tonne from $2,003 for the May contract the previous week. On NYBOT-ICE, Arabica for July firmed to 139 US cents a pound from 138.95 cents for the May contract.
SUGAR: Prices diverged as traders contemplated a production surplus in Brazil, which is the world's biggest producer. By Friday on Liffe, the price of a tonne of white sugar for delivery in August fell to $498.70 from $503.10 for the May contract the previous week. On NYBOT-ICE, the price of unrefined sugar for July rose to 17.78 US cents a pound from 17.63 cents for the May contract.
RUBBER: The market flattened as traders awaited the outcome of a key producers' meeting in Thailand from April 10-12. Top rubber producers Thailand, Indonesia and Malaysia gathered to discuss stabilising the market. The Malaysian Rubber Board's benchmark SMR20 stood at 257.40 US cents a kilo, down from 257.50 cents the previous week.
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