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Friday, December 06, 2013
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Oil plummets 8%
NEW YORK—Oil plunged more than eight per cent on yesterday, heading for the third biggest daily drop in dollar terms on record, as concerns about economic growth and monetary tightening spurred a sell-off in commodities. US crude tumbled below US$100 a barrel in heavy trading volume after weak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while US weekly jobless claims hit eight-month highs. World stocks fell and the 19-commodity Reuters-Jefferies CRB index swooned more than 4.5 per cent, heading for its biggest weekly decline since December 2008.
“The longer-term bull cycle is still in place, but this correction may have a life span of several months, as weaker economic data is fueling this correction to a large part,” said Sterling Smith, senior analyst for Country Hedging Inc in Minnesota. Brent crude futures for June traded down US$10.28 to $110.91 a barrel at 2.10 pm EDT, the fourth straight day of losses, smashing below the 50-day moving average as the sell-off picked up steam after prices dropped below US$120 a barrel. Brent was headed for its biggest one-day drop in dollar terms since shortly after the collapse. US crude dropped below US$100 for the first time since March 19. It was off US$9.54 at US$99.70 a barrel.
Trade levels surged, with volumes for Brent up 80 per cent over the 30-day moving average and 70 per cent over the 250-day average in afternoon activity. US crude volume was 36 per cent over the 30-day average. The disruption of oil exports from Libya, concerns about the supply impact of unrest in the Middle East and Africa, and the weaker dollar have sent crude to the highest level since 2008, with Brent topping US$127 a barrel this year and US crude over US$114 a barrel. Selling pressure on oil and other commodities came on several fronts this week, with investors weighing factors from the death of Osama bin Laden to the impact of higher fuel and commodity costs on the economies of consumer nations to monetary policy in major economies.
India’s central bank raised rates more than expected on Tuesday, and expectations No. 2 oil consumer China could take similar actions helped push down prices on Wednesday. The euro headed for its biggest slide against the dollar since November after the European Central Bank hinted interest rates were unlikely to rise next month, short-circuiting a rally that had driven the currency to a 17-month high. (Reuters)
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