Most global commodity prices tumbled last week amid a bloodbath on markets as traders fled to safety in the face of poor economic data and eurozone debt crisis developments that now threaten Spain. "Rising economic uncertainty in Europe and the lack of a policy response are affecting all risk assets," said Barclays Capital analyst Sudakshina Unnikrishnan.
"Crude oil markets came under a lot of pressure this week as mounting macroeconomic concerns surrounding Greece and the peripheral economies weighed on prices." The European single currency on Friday sank to $1.2288, touching a low last seen on July 1, 2010, as investors reacted to poor US non-farm payrolls data and sought safety in the dollar amid the ongoing eurozone debt tensions.
The US economy added just 69,000 jobs in May, pushing the unemployment rate up to 8.2 percent, the Labour Department said. Market expectations had been for an increase of 150,000 jobs. The rallying greenback makes dollar-priced commodities more expensive for buyers using weaker currencies. That tends to push demand, and prices, lower.
"June began where May left off," said analyst David Morrison at trading group GFT Markets. "Investors continued to rush out of the euro and into the relative safety of the US dollar. This has put downside pressure on all dollar-denominated commodity markets, although gold (is) now surging."
OIL: Brent oil prices nose-dived under $98 on Friday for the first time in almost 16 months, hit by poor US non-farm payrolls data, the strong dollar, weak Chinese manufacturing figures and eurozone debt tensions. Brent North Sea crude slumped to $97.70 per barrel - the lowest level since February 8, 2011. New York's West Texas Intermediate (WTI) dived to $82.56 a barrel, which was last seen on October 10.
Crude futures, which suffered heavy losses last month on eurozone concerns, dropped even lower after Friday's dismal payrolls report in the top global oil consumer the United States. "Today's dismal non-farm payroll report ... has raised expectations that the Federal Reserve will announce yet another programme of asset purchases at its meeting later this month," added Morrison.
"In fact, as Europe implodes and Chinese growth slows, there are hopes that some form of co-ordinated central bank intervention is now on the table. Without this, risk assets look like they have much further to fall." Brent oil prices had already slumped by 15 percent during May, while WTI collapsed by almost 18 percent, as concerns mounted over the state of the faltering world economy.
"Oil prices have dipped below the psychological $100-per-barrel with the focus turning away from the Iran situation and onto the state of the global economy after a raft of poor economic results over recent days," added Inenco analyst Gary Hornby. "Concerns over Spain have resurfaced after the country's 10-year bond yields nudged close to 7.0 percent, a level seen as unsustainable and continuing uncertainty over the upcoming Greek elections in mid-June." Adding to the sense of panic, latest figures showed a net 97 billion euros ($121 billion) of investor money fled Spain in the first three months of the year - the highest on record.
China meanwhile revealed Friday that its manufacturing activity grew at a much slower rate than expected in May, further confirming the world's number two economy is slowing rapidly. The official purchasing managers index fell to 50.4 from 53.3 in April, the China Federation of Logistics and Purchasing said. A reading above 50 indicates expansion, while a reading below 50 suggests contraction.
Back in the United States on Thursday, the government cut its estimate for first-quarter economic growth, to 1.9 percent from 2.2 percent, raising questions over how much of a rebound could be expected in the current quarter. "A slowdown in the rate of growth from both the US and China has added bearish sentiment to future oil demand as US oil stockpiles nudge close to record highs and Chinese manufacturing activity remains sluggish," said Hornby.
Market concerns were exacerbated by Thursday's weekly US oil stockpiles report which showed an increase of 2.2 million barrels. Reserves now stand at the highest level in 22 years for this time of the year. By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July dived to $97.70 a barrel from $106.91 a week earlier. On the New York Mercantile Exchange, WTI or light sweet crude for July sank to $82.56 from $90.99.
PRECIOUS METALS: Gold bucked the downward trend to post modest gains as investors sought shelter from global markets turmoil. "Gold proved itself to be a safe haven once again," noted Commerzbank analyst Carsten Fritsch. By late Friday on the London Bullion Market, gold rose to $1,606 an ounce from $1,569.50 a week earlier. Silver declined to $27.38 an ounce from $28.24. On the London Platinum and Palladium Market, platinum fell to $1,407 an ounce from $1,423. Palladium rallied to $607 an ounce, from $590 an ounce.
BASE METALS: Prices struck more multi-month lows. "Metals were slammed by a surging dollar, rather soft US macro data, and continued concern about Europe's worsening debt crisis," said analyst Ed Meir at brokerage INTL FCStone. "For the month as a whole, copper finished May off 11 percent, its third consecutive monthly decline and its biggest one-month swoon since September 2011."
He added: "Base metals are dropping on account of poor manufacturing data coming out of Europe and China." By late Friday on the London Metal Exchange, copper for delivery in three months fell to $7,363 a tonne from $7,637 a week earlier.
---- Three-month aluminium decreased to $1,983 a tonne from $2,014.
---- Three-month lead slipped to $1,900 a tonne from $1,952.
---- Three-month tin sank to $19,290 a tonne from $19,900.
---- Three-month nickel declined to $16,174 a tonne from $17,011.
---- Three-month zinc dropped to $1,875 a tonne from $1,895.
COCOA: Cocoa futures extended recent losses. By Friday on Liffe, London's futures exchange, cocoa for delivery in July dipped to £1,465 a tonne from £1,478 a week earlier. In New York on the NYBOT-ICE, cocoa for July declined to $2,067 a tonne from $2,123.
COFFEE: Coffee prices also hit reverse gear, with Arabica touching the lowest point since July 2010 By Friday on NYBOT-ICE, Arabica for delivery in July fell to 158.85 US cents a pound from 167.50 cents a week earlier. On Liffe, Robusta for delivery in July dipped to $2,130 a tonne from $2,240.
SUGAR: Sugar sank, hitting levels last seen in August 2010, as the market was also weighed down by forecasts of plentiful supplies. By Friday on Liffe, the price of a tonne of white sugar for delivery in August eased to $554 from $558 a week earlier. On NYBOT-ICE, the price of unrefined sugar for July slid to 19.27 US cents a pound from 19.68 cents.
RUBBER: Prices fell, despite tight supply conditions, as traders eyed renewed concerns over the eurozone crisis. By Friday, the Malaysian Rubber Board's benchmark SMR20 dropped to 311.15 US cents a kilo from 318.45 cents the previous week.
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