Commodity prices mainly slid this week, with oil dropping below 35 dollars per barrel in New York amid continuing global economic gloom, analysts said. "Prices (of oil) fell sharply as once again a gloomy global economic outlook raised demand concerns," said Barclays Capital analyst Kevin Norrish. Towards the end of 2008, crude prices slumped to just above 33 dollars, which was the lowest point in four and a half years.
OIL: New York oil prices tumbled in a market hammered by dismal economic news, worries over increasing US energy stockpiles and a new Opec/ forecast of falling demand for 2009. The market took another hit after the International Energy Agency slashed its crude demand forecasts on Friday due to a much sharper-than-expected world-wide economic slowdown.
"Crude oil prices slide further amid continuing economic gloom," said analyst Nimit Khamar at the Sucden brokerage in London. The IEA said Friday that the market faced its first two-year contraction in demand since 1982 and 1983. The energy watchdog added that it wanted to anticipate sharp downward revisions to global economic growth forecasts and so had halved its own estimate to just 1.2 percent "given the worsening outlook."
Accordingly, it cut its projection for 2009 oil demand by one million barrels per day (bpd) to 85.3 million bpd, representing a fall of 0.6 percent from revised 2008 figures. For 2008, the IEA put global oil demand at 85.8 million bpd, down 0.3 percent, adding that "the expected two-year contraction in oil demand would be the first since 1982 and 1983."
In a regular monthly report, the IEA noted that Opec/ output in December was down one million bpd from September and down nearly two million bpd from mid-2008 highs when oil hit record highs above 147 dollars per barrel. Opec, which has cut output 4.2 million bpd over recent months in a bid to support prices, had warned on Thursday that global oil demand would contract by a more-than-expected 0.2 percent this year in light of the economic crisis.
"The depressed world economy is expected to have a large impact on oil demand this year," especially in industrialised countries, the Organisation of the Petroleum Exporting Countries had said. "The year 2009 started with a very depressed world economy which caused the year's oil demand forecast to show negative growth" of 0.18 million barrels per day (bpd) or 0.2 percent, Opec said in a monthly report.
World oil prices fell by about 54 percent in 2008 as a sharp global economic slowdown dampened energy demand in the second half of the year. Last July, crude futures rocketed to record highs of above 147 dollars a barrel. By Friday on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in February slid to 35.29 dollars from 40.35 dollars a week earlier. On London's InterContinental Exchange (ICE), Brent North Sea crude for March stood at 47.50 dollars, from 43.71 the previous week when February was the most traded contract.
PRECIOUS METALS: Gold sank close to 800 dollars an ounce this week, hit by the strengthening dollar. Silver, platinum and palladium also pulled lower. Gold, the traditional safehaven in troubled times, could hit record highs again in coming months as investors seek to protect their money in the face of the worst economic downturn in years, the independent precious metals consultancy GFMS said Thursday.
GFMS said "gold prices could achieve a fresh all time high in the first half of 2009 as net investment surges ... there has already been several months of rocketing demand, chiefly in Europe and North America." The main driver behind the expected increase in investment "is risk aversion and a desire to preserve wealth," it said in a report.
"Gold was also seen as benefiting from concerns over the solidity of other assets, be that cash at a time of bank failures, equities as we head into a possibly deep recession or bonds as the threat of inflation looms." The metal had hit a record high 1,032.70 dollars an ounce in March last year but then fell back sharply. On the London Bullion Market on Friday, gold dropped 833.75 dollars an ounce at the late fixing from 847.25 dollars a week earlier.
Silver slid to 10.78 dollars an ounce from 11.22 dollars. On the London Platinum and Palladium Market, platinum dipped to 943 dollars an ounce at the late fixing on Friday from 988 dollars. Palladium retreated to 185 dollars an ounce from 196 dollars.
BASE METALS: Base metals prices diverged amid widespread concern that a global recession would hurt demand. "Gains are unlikely to persist amid the current recessionary environment characterised by poor sentiment, weak demand and rising inventories," warned Barclays Capital analysts. By Friday, copper for delivery in three months rose to 3,397 dollars a tonne on the London Metal Exchange from 3,329 dollars the previous week.
Three-month aluminium eased to 1,487 dollars a tonne from 1,555 dollars. Three-month lead climbed to 1,174 dollars a tonne from 1,155 dollars. Three-month zinc increased to 1,265 dollars a tonne from 1,245 dollars. Three-month tin fell to 11,199 dollars a tonne from 11,286 dollars. Three-month nickel dropped to 10,913 dollars a tonne from 11,449 dollars.
COCOA: The price of cocoa fell on profit-taking after striking a historic pinnacle the previous week. Cocoa futures had hit a record high of 1,861 dollars a tonne last week in London, lifted by lingering concerns about the quality of harvest in the Ivory Coast, which also suffers from widespread violent unrest.
By Friday on Liffe, London's futures exchange, the price of cocoa for delivery in March sank to 1,762 pounds a tonne from 1,831 pounds a week earlier. On the New York Board of Trade (NYBOT), the March cocoa contract decreased to 2,463 dollars a tonne from 2,609 dollars.
COFFEE: Coffee prices weakened on profit-taking after scoring two-month peaks the previous week. By Friday on Liffe, Robusta for delivery in March fell to 1,965 dollars a tonne from 2,207 dollars a week earlier. On the NYBOT, Arabica for March sank to 116.35 US cents a pound from 117.25 US cents.
GRAINS AND SOYA: Grains and soya prices receded as the market was dampened by a downbeat US market report. "Monday we had a negative supply demand report and production report on corn and beans... That continues to be an anchor in the market," said US Commodities analyst Don Roose.
By Friday on the Chicago Board of Trade, maize for delivery in March fell to 3.77 dollars a bushel from 4.10 dollars the previous week. March-dated soyabean meal - used in animal feed - dipped to 10.12 dollars from 10.36 dollars. Wheat for March decreased to 5.84 dollars a bushel from 6.29 dollars.
SUGAR: Sugar prices shot higher. "Sugar prices rise sharply as diminishing expectations for the size of Indian production this year underpins gains," Barclays Capital analysts said. By Friday on Liffe, the price of a tonne of white sugar for delivery in March rose to 344.50 pounds from 337.50 pounds a week earlier. On NYBOT, the price of unrefined sugar for March advanced to 12.34 US cents per pound from 12.12 cents.
RUBBER: Malaysian rubber prices edged up amid weak demand particularly from the auto industry due to the global economic downturn, dealers said. The International Rubber Study Group is predicting a drop in global rubber consumption by as much as five percent this year. However, they said demand for the commodity from China remained strong ahead of the Chinese New Year holidays, which fall at the end of this month. On Friday, the Malaysian Rubber Board's benchmark SMR20 rose to 145.60 US cents a kilo from 144.95 US cents a kilo a week ago.