Commodities Drop the Fifth Time in Six Days on Outlook
Commodities dropped for the fifth time in sixth days, led by copper, diesel and crude oil, after the dollar advanced and the International Monetary Fund cut its forecast for global economic growth.
The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped as much as 1.8 percent to 599.13, just short of the nine-month low of 597.96 touched yesterday. West Texas Intermediate oil fell 2.3 percent and Brent crude traded in London slipped to the lowest level since July. Copper dropped to the lowest price since October 2011.
The dollar gained versus most of its major peers amid speculation that the yen’s decline will continue unabated and that the European Central Bank may cut interest rates, spurring demand for haven assets. A rising dollar reduces the appeal of investment in raw materials denominated in the U.S. currency.
“The strength of the U.S. dollar coupled with the downward revision to the general economic outlook isn’t supportive of commodity price inflation,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “There may be bullish factors at work in individual commodity markets but they’re being overwhelmed by the macro picture.”
The global economy will expand 3.3 percent this year, less than the 3.5 percent forecast in January, after 3.2 percent growth in 2012, the Washington-based IMF said yesterday, cutting its 2013 prediction for a fourth consecutive time.
WTI crude oil for May delivery declined $2.04 to $86.68 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 14. The contract dropped as much as $2.66, or 3 percent, to $86.06 during intraday trading.
Brent oil for June settlement fell $2.22, or 2.2 percent, to end the session at $97.69 a barrel on the London-based ICE Futures Europe exchange, the lowest level since July 2.
Ultra-low-sulfur diesel for May delivery declined 7.19 cents, or 2.6 percent, to $2.7346 a gallon on the Nymex, the lowest settlement since July 10. Gasoline for May delivery dropped 5.28 cents, or 1.9 percent, to $2.729 a gallon, the lowest level since Jan. 16.
Copper for delivery in May slid 3.6 percent to close at $3.1875 a pound on the Comex in New York, the least since Oct. 20, 2011.
Gold futures for June delivery retreated 0.3 percent to settle at $1,382.70 an ounce on the Comex in New York. The metal dropped to $1,360.60 on May 15, the lowest settlement since Feb. 11, 2011.
Silver futures for May delivery fell 1.4 percent to close at $23.307 an ounce in New York, the least since Oct. 22, 2010.
Soybean futures for July delivery rose 0.3 percent to settle at $13.80 a bushel on the Chicago Board of Trade. July- delivery corn gained 0.1 percent to $6.4125 a bushel and wheat slid 0.1 percent to $7.0725 a bushel.
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