World oil prices tumbled close to six-year lows this week, as record-high US crude inventories deepened worries over the global supply glut. In another blow, official data showed Friday that the US economy slowed sharply in the fourth quarter of 2014, sparking fears over demand in the United States, which is the world's biggest oil consumer.
The overall level of stockpiles was the highest since the US government began keeping weekly records in 1982. Meanwhile, data showed Friday that US gross domestic product (GDP) grew at an annual rate of 2.6 percent in the fourth quarter. That marked a steep decline from the brisk 5.0 percent growth in the third quarter. "Weaker than expected US GDP numbers reinforce the perception that we are seeing a little bit of a slowdown in the pace of the US recovery," said CMC Markets analyst Michael Hewson.
"With oil storage at record levels this suggests that demand is likely to remain weak, and thus exert further limitations on the ability of the oil price to rebound, suggesting we could well see a gradual move towards the $40 level," he warned. In reaction to the US inventories data, meanwhile, WTI dropped $1.78 and Brent lost $1.13 on Wednesday. Sucden analyst Myrto Sokou added that the weekly US energy report "indicated a prolonged deterioration in oil fundamentals" of supply and demand.
The oil market has lost more than half its value since June last year when crude was sitting at more than $100 a barrel due to a supply glut, boosted largely by robust US shale oil production, and weak global demand. The problem was exacerbated in November after the Opec oil cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 percent of global crude.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in March edged up to $49.65 a barrel from $49.55 one week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for March dipped to $45.35 a barrel compared with $46.91.
Anti-austerity party Syriza won Greece's elections last Sunday, sparking fears that the country could end up exiting the eurozone. However, it could lift gold in the longer term, because the precious metal is regarded as a safe investment in times of geopolitical or economic turmoil.
"Whether or not Greece ultimately exits the euro, we expect the price of gold to be boosted further this year by the return of safe-haven demand as the country's financial problems drag on," Jessop added. By Friday on the London Bullion Market, the price of gold slid to $1,260.25 an ounce from $1,294.75 a week earlier. Silver sank to $16.92 an ounce from $18.23. On the London Platinum and Palladium Market, platinum fell to $1,221 an ounce from $1,274. Palladium advanced to $775 an ounce from $767.
"The selling pressure has doubtless been triggered by fears that financing transactions secured by copper may be wound up. Concerns about China's economic slowdown are also likely to have played their part." By Friday on the London Metal Exchange, copper for delivery in three months slid to $5,468 a tonne from $5,559 the previous week.
-- Three-month aluminium rose to $1,863.50 a tonne from $1,835.50.
-- Three-month lead was unchanged at $1,845 per tonne.
-- Three-month tin declined to $19,250 a tonne from $19,440.
-- Three-month nickel firmed to $14,720 a tonne from $14,500.