Oil struck fresh five-year low points this week on the back of the strong dollar, oversupply fears and major producer Saudi Arabia slashing its export prices. The market had already dived last week after the Organisation of Petroleum Exporting Countries (Opec) left its output ceiling unchanged, despite a global supply glut. Crude futures have now slumped by about 40 percent since June, faced also with cheaper oil being extracted from North American shale rock.
Weak economic data has added to the pressure, with worse-than-expected manufacturing figures in China, the world's largest energy consumer. Commodities were also hit late Friday as the dollar rallied on bright data showing the US economy created 321,000 new jobs in November, some 90,000 more than expectations.
OIL: Crude futures sank to fresh five-year lows on Monday, with New York crude hitting $63.72 a barrel - the lowest level since July 2009. London Brent oil touched an October 2009 low of $67.53 a barrel, before staging a technical rebound. "Prices have once again turned lower as concern about the excessive supply continues to weigh," said Forex.com analyst Fawad Razaqzada.
Oil dipped Tuesday after the Iraqi government and autonomous Kurds struck a deal that will boost the nation's crude oil exports to an already oversupplied global market. Under the deal, due to take effect at the start of 2015, 250,000 barrels per day of oil will be exported from the autonomous region and another 300,000 bpd from the disputed province of Kirkuk.
The agreement could help push Opec member Iraq's daily output past three million barrels per day, up from around 2.5 million barrels in November. The oil market diverged Wednesday as traders digested a drop in US crude inventories, which tends to signal strong demand. However on Thursday and Friday, crude futures hit reverse gear once again, dented by reports that Saudi Arabia has trimmed its export prices and is doing nothing to tighten supplies.
Saudi Arabia is the biggest and most influential member of the 12-nation Opec cartel. Reports said Riyadh cut January prices for its crude to Asian and US buyers, as the world's leading exporter defends its market share and, some analysts speculate, seeks to drive high-price producers out of the market.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in January sank to $68.36 a barrel compared with $73.05 one week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for January dived to $65.31 a barrel from $69.13 a week earlier.
PRECIOUS METALS: Gold prices advanced as dealers shrugged off the rallying dollar and brighter-than-anticipated non-farm payrolls (NFP) data. The reaction "suggests that the dollar is no longer having as much impact on gold's direction as it had previously", noted analyst Razaqzada.
The stronger dollar normally makes commodities priced in the unit more expensive for buyers using weaker currencies, denting demand and price levels. By late Friday on the London Bullion Market, the price of gold rose to $1,194 an ounce from $1,182.75 a week earlier. Silver gained to $16.33 an ounce from $15.97. On the London Platinum and Palladium Market, platinum stood at $1,231 an ounce against $1,205. Palladium decreased to $806 an ounce from $809.
BASE METALS: Base or industrial metal prices mostly climbed despite weak Chinese manufacturing data. China's official purchasing managers index fell to an eight-month low of 50.3 in November from 50.8 in October. A figure above 50 signals expansion in the sector, while anything below indicates contraction.
"We would view the current weakness of Chinese manufacturing as a reason to buy base metals, given the likelihood that Chinese authorities will act to support growth," Natixis analysts said. "Base metals also look cheap relative to the rapid gains in Chinese equities over the past fortnight." The figure is the latest pointing to a slowdown in the world's number two economy and follows a surprise move by the central People's Bank of China on November 21 to cut interest rates. By Friday on the London Metal Exchange, copper for delivery in three months rose to $6,453 a tonne from $6,427.50 a week earlier.
-- Three-month aluminium declined to $1,991.25 a tonne from $2,025.
-- Three-month lead firmed to $2,031 a tonne from $2,030.
-- Three-month tin gained to $20,325 a tonne from $20,140.
-- Three-month nickel rose to $16,940 a tonne from $16,240.
-- Three-month zinc increased to $2,238.75 a tonne from $2,221.25.
COCOA: Prices forged ahead this week as traders shrugged off supply jitters for the commodity that is mostly used to produce chocolate. "Despite concerns about a chocolate shortage, the world cocoa market remains well supplied," said Capital Economics analysts. By Friday on Liffe, London's futures exchange, cocoa for delivery in March rose to £1,922 a tonne from £1,901 a week earlier. On the ICE Futures US exchange, cocoa for March increased to $2,887 a tonne from $2,862 a week earlier.
SUGAR: The price of sugar hit three-month troughs on speculative selling and abundant global supply. "Sugar was lower in part on selling seen by speculators in all commodities markets," said Price Futures Group Jack Scoville. By Friday on Liffe, the price of a tonne of white sugar for delivery in March reversed to $395.20 from $413.80 a week earlier. On ICE Futures US, the price of unrefined sugar for March decreased to 15.14 US cents a pound from 15.91 US cents a week earlier.
COFFEE: The coffee market also registered losses. "The price fall was sparked by reports that Brazil exported 2.86 million bags of coffee in November - more than the 2.71 million bags exported last November," said Commerzbank analysts.
They added the outlook was clouded by "high uncertainty" surrounding key producer Brazil's harvest in 2015, while "continued scarcity" of Arabica coffee should support price levels. By Friday on ICE Futures US, Arabica for delivery in March slid to 181.75 US cents a pound compared with 192.80 cents one week earlier. On Liffe, Robusta for January fell to $2,049 a tonne from $2,094 a week earlier.
RUBBER: Kuala Lumpur rubber prices fell due to lower oil prices and the weakening ringgit currency. The Malaysian Rubber Board's benchmark SMR20 dipped to 148.10 US cents a kilo from 151.30 US cents the previous week.
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