Oil collapses again in volatile week

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 next week's pivotal European Central Bank (ECB) meeting.

Some commodities were weighed down by the strong US dollar.

The euro hit an 11-year low on Friday under US$1.15 on the increasing prospect of fresh stimulus from the ECB, dealers said.

European benchmark Brent tumbled on Tuesday to US$45.19 per barrel, a level last seen in March 2009, while New York crude struck a similar low at US$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 said.

The global oil market has more than halved since June, crashing on stubborn worries over global oversupply and weak demand in a faltering world economy.

The IEA maintained its oil demand forecast for 2015, expecting it to grow by 900,000 barrels a day to reach 93.3 million barrels.

The oil market had fallen on Thursday on news that the Organization of the Petroleum Exporting Countries (Opec) had overproduced in December, while it also cut its global demand outlook.

The 12-nation Opec cartel, which produces about one third of global supplies, said in a monthly report that its production rose to 30.2 million barrels a day in December, above its 30-million limit.

By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in March eased to US$49.50 a barrel (US$49.67 for the February contract the previous week).

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for February fell to US$47.16 a barrel (US$47.96).

Gold rallied to a four-month peak at US$1,279 per ounce on Friday, as investors sought shelter from ongoing turmoil in the markets.

"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 US$1,277.50 an ounce from US$1,217.75 a week earlier.

Silver climbed to US$16.92 an ounce from US$16.24.

On the London Platinum and Palladium Market, platinum grew to US$1,262 an ounce from US$1,225.

Palladium edged down to US$757 an ounce from US$795.

The price of copper tumbled to the lowest level for more than five years after the World Bank slashed its global economic forecasts, parking doubts over the demand outlook for the metal. It dived on Wednesday to US$5,353.25 per tonne, a level last witnessed in July 2009.

The metal, which is used in plumbing, heating, electrical and telecommunications wiring, has now shed 15 per cent of its value this year.

"Unease over the global economy engulfed commodities," said trading firm ETX Capital analyst David Papier.

Copper "is often considered a barometer of industrial demand, so the slump leant extra gravitas to news that the World Bank had cut its 2015 growth forecasts blaming sluggishness in the eurozone, Japan and some major emerging economies", Mr Papier noted.

By Friday on the London Metal Exchange, copper for delivery in three months sank to US$5,679 a tonne (US$6,112 the previous week).

Three-month aluminium slid to US$1,802 a tonne (US$1,820.50); lead retreated to US$1,785.25 a tonne (US$1,820.50); tin dipped to US$19,400 a tonne (US$19,630); nickel slid to US$14,567 ( US$15,508).

Cocoa futures declined as traders digested signs of cooling demand in Europe and North America.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in March dropped to £2,031 a tonne from £2,050 a week earlier.

On the ICE Futures US exchange, cocoa for March fell to US$2,946 a tonne from US$2,993.

Sugar prices enjoyed one-month peaks, driven by worries that a lack of rain could hurt sugar production in key producer Brazil.

Brazilian weather service Somar Meteorologica "warned that a lack of rain would probably result in lower yields in Brazil", said Commerzbank analysts.

By Friday on LIFFE, the price of a tonne of white sugar for delivery in March gained to US$401 from US$390.10 a week earlier.

On ICE Futures US, the price of unrefined sugar for March rose to 15.44 US cents a pound from 14.84 US cents.

Coffee prices dipped in subdued trade on forecasts of flat output in Brazil. By Friday on ICE Futures US, Arabica for delivery in March dropped to 173 US cents a pound from 181.50 cents a week earlier.

On LIFFE, Robusta for March decreased to US$1,971 a tonne from US$1,992.

Prices sank after the World Bank slashed its economic growth forecasts, with additional pressure stemming from sliding oil prices.

Crude oil is used in the production of synthetic rubber.

The Malaysian Rubber Board's benchmark SMR20 on Friday fell to 139.90 US cents a kilo from 144.45 cents the previous week. AFP