LONDON: Commodity prices diverged this week with markets impacted by superstorm Sandy and strong Chinese and US economic data ahead of next week’s presidential elections in the United States.
Wall Street shut for two days at the start of the week as Sandy bore down on the US east coast, leaving parts of New York flooded and millions without power.
At least 92 people have now been reported dead across the 15 states hit by Monday night’s unprecedented storm, including 40 in New York City, while some economists have estimated the disaster will cost up to $50bn.
In better news for the world’s biggest economy, the United States on Friday said that it had added 171,000 jobs in October, far more than expected, while the unemployment rate edged up to 7.9 percent. The encouraging jobs report provided a final snapshot of a slowly improving economy as President Barack Obama battles for re-election next Tuesday in a neck-and-neck race against Republican challenger Mitt Romney.
OIL: Oil prices dropped as a stronger dollar caused by the positive US jobs data offset disruptions to energy supplies caused by Sandy and a surprising drop in US crude inventories, traders said. A stronger dollar makes commodities priced in the US unit more expensive for holders of rival currencies, denting demand and eventually prices.
In the United States, the world’s largest consumer of oil, the Department of Energy on Thursday said that crude inventories had fallen by 2.0 million barrels last week, while analysts had forecast a rise. US energy stockpiles could meanwhile drop further owing to severe refinery disruption caused by Sandy.
Two US refineries with a combined crude processing capacity of 308,000 barrels a day, which closed when Sandy hit on Monday, were awaiting post-storm assessments before reopening, reports said.
Oil prices on Thursday won support from improved US economic data, a surprise drop in crude supplies and a rebound in Chinese manufacturing, traders said. Data showed an expanding manufacturing sector in China, the world’s biggest energy consumer, for the first time in three months. By Friday on the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for December dipped to $85.32 a barrel from $85.81 a week earlier.
On London’s Intercontinental Exchange, Brent North Sea crude for delivery in December slid to $106.49 a barrel from $108.81 a week earlier.
PRECIOUS METALS: Gold prices retreated under $1,700 an ounce, with the safe haven yellow metal losing some shine on the back of positive economic data.
“Capital continues to rotate out of the traditional safe haven play as US economic data continues to point to some form of recovery, albeit a weak one,” said Michael Hewson, analyst at CMC Markets trading group.
By late Friday on the London Bullion Market, gold dropped to $1,685 an ounce from $1,716 a week earlier. Silver rose to $31.92 an ounce from $31.67. On the London Platinum and Palladium Market, platinum dipped to $1,552 an ounce from $1,572. Palladium nudged higher to $608 an ounce from $605.
BASE METALS: Base or industrial metals mostly rose in a volatile week’s trading, having fallen early on before rebounding late in the week on positive Chinese and US economic data.
“There are increasing signs of the Chinese economy gathering pace again,” said analysts at Commerzbank. “More robust economic growth again, supported among other things by numerous infrastructural projects, is likely to spark solid demand for commodities in general and for metals in particular.”
By late Friday on the London Metal Exchange, copper for delivery in three months dropped to $7,687.50 a tonne from $7,817 a week earlier. Three-month aluminium edged up $1,938 a tonne from $1,936. Three-month lead grew to $2,099 a tonne from $2,012. Three-month tin increased to $20,200 a tonne from $19,990. Three-month nickel slipped to $15,972 a tonne from $16,180. Three-month zinc increased to $1,873.75 a tonne from $1,839.
COCOA: Prices rebounded on data showing tighter supplies in leading producer Ivory Coast, analysts said. By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March stood at £1,573 a tonne compared with £1,547 for the December contract a week earlier. On New York’s NYBOT-ICE exchange, cocoa for December climbed to $2,435 a tonne from $2,391.
COFFEE: Coffee prices hit multi-month lows as an ample supply backdrop offset worries earlier in the week that Sandy would damage warehouses stocking beans, analysts said. By Friday on NYBOT-ICE, Arabica for delivery in December fell to 154.10 US cents a pound from 160.50 a week earlier. On LIFFE, Robusta for January stood at $1,973 a tonne compared with $2,048 for the November contract a week earlier.
SUGAR: White sugar hit a fresh 26-month low point at $518.30 a tonne Thursday on expectations of ample Brazilian supplies. By Friday on LIFFE, the price of a tonne of white sugar for delivery in December dropped to $520 from $531 a week earlier.
On NYBOT-ICE, the price of unrefined sugar for March slipped to 19.41 US cents a pound from 19.56 cents the previous week.
GRAINS AND SOYA: Maize, wheat and soya prices fell, hit by a recovering dollar. By Friday on the Chicago Board of Trade, maize for delivery in December dropped to $7.38 a bushel from $7.43 a week earlier. November-dated soyabean meal — used in animal feed — retreated to $15.33 a bushel from $15.58. Wheat for December decreased to $8.62 a bushel from $8.76.
RUBBER: Prices fell further on growing fears that a global economic slowdown would curb demand for the commodity. The Malaysian Rubber Board’s benchmark SMR20 ended the week at 283.55 US cents a kilo, down from 286.05 cents the previous week.
AFP
