No floor price in sight for oil
Crude falls on reports of rise in Opecís output in Dec; gold rallies amid volatility
London — Oil plunged close to six-year lows last week on oversupply worries, before staging a slight recovery as the International Energy Agency (IEA) declared there were signs that “the tide will turn”.
Commodity investors also digested the Swiss central bank’s shock move to abandon its policy of weakening the franc, while traders readied for this week’s pivotal European Central Bank (ECB) meeting.
Some commodities were weighed down by the strong dollar. The euro hit an 11-year low on Friday under $1.15 on the increasing prospect of fresh stimulus from the ECB, dealers said.
European benchmark Brent tumbled on Tuesday to $45.19 per barrel, a level last seen in March 2009, while New York crude struck a similar low at $44.20.
“How low the market’s floor will be is anyone’s guess,” the IEA watchdog said in a monthly report on Friday. “A price recovery — barring any major disruption — may not be imminent, but signs are mounting that the tide will turn.”
The IEA maintained its oil demand forecast for 2015, expecting it to grow by 0.9 million barrels a day to reach 93.3 million barrels. The agency also cautioned that prices were expected to keep falling in the short-term.
The oil market had fallen on Thursday on news that the Organisation of Petroleum Exporting Countries (Opec) had overproduced in December. The 12-nation Opec said in a monthly report that its production rose to 30.2 million barrels a day in December, above its 30 million limit. It also projected that demand for its oil would fall to 28.8 million barrels per day this year from 29.1 million in 2014.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in March eased to $49.50 a barrel from $49.67 for the February contract the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for February reversed to $47.16 a barrel from $47.96.
Meanwhile, gold rallied to a four-month peak at $1,279 per ounce on Friday, as investors sought shelter from ongoing markets turmoil.
“Gold has rallied to its highest price since September ... as the massive appreciation in Swiss francs has prompted a new wave of demand for safe havens,” said CMC Markets analyst Jasper Lawler.
By Friday on the London Bullion Market, the price of gold rallied to $1,277.50 an ounce from $1,217.75 a week earlier. Silver climbed to $16.92 an ounce from $16.24. On the London Platinum and Palladium Market, platinum grew to $1,262 an ounce from $1,225. Palladium edged down to $757 an ounce from $795.
The price of copper tumbled to the lowest level for more than five years after the World Bank slashed its global economic forecasts. Copper dived on Wednesday to $5,353.25 per tonne, last witnessed in July 2009.
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