Tags: Commodities | Crude | Oil | OPEC

Commodities Slump to Five-Year Low as Crude Oil Drops on OPEC

Friday, 28 November 2014 06:14 PM

Commodities retreated to a five-year low as crude oil tumbled after OPEC refrained from cutting output to ease a global glut. Gold and copper also declined.

The Bloomberg Commodity Index of 22 raw materials dropped 3.9 percent to 112.9451, the lowest since April 2009. The index resumed trading after the U.S. Thanksgiving holiday Thursday, when Brent crude plunged 6.7 percent after the Organization of Petroleum Exporting Countries took no action on production at a meeting in Vienna.

Commodities are poised for a fourth straight year of losses as West Texas Intermediate oil futures are set for the biggest slump since the 2008 financial crisis. China is heading for the slowest yearly expansion pace since 1990. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, closed at the highest since March 2009.

“It has been a broad-based selloff,” Virendra Chauhan, an analyst at Energy Aspects Ltd. in London, said in a telephone interview. “It’s likely to have weighed on other risk assets.”

OPEC maintained its collective production ceiling of 30 million barrels a day, Ali Al-Naimi, Saudi Arabia’s oil minister, said after the 12 nations met in the Austrian capital. U.S. benchmark WTI futures, which traded electronically for settlement, dropped 10 percent to $66.15 a barrel, the lowest close since September 2009.

Gold Falls

Spot gold fell 2.1 percent to $1,167.35 an ounce, the lowest since Nov. 13 and the first weekly loss in four. Gold futures on the Comex in New York fell 1.8 percent to $1,175.50.

Copper for delivery in three months traded 3.2 percent lower at $6,351 a metric ton on the London Metal Exchange, the biggest weekly drop since April 2013.

A stronger dollar makes raw materials priced in the currency more expensive in terms of other monies.

“Precious metals declined as lower oil prices prompted concerns about deflation,” Australia & New Zealand Banking Group Ltd. said in a report. Industrial metals have been hurt by the drop in the oil price as it may help reduce production costs, according to the bank.

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Commodities retreated to a five-year low as crude oil tumbled after OPEC refrained from cutting output to ease a global glut.
Commodities, Crude, Oil, OPEC
Friday, 28 November 2014 06:14 PM
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