Oil Leads Commodities Lower

Oil prices fell by $1 a barrel on Thursday while gold steadied after the US Senate on Wednesday approved a revamped version of the US government’s $700bn rescue plan.

Nymex November West Texas Intermediate fell $1 to $97.54 a barrel while ICE November Brent lost $1.27 at $94.06 a barrel.

Oil prices remained under pressure following the release on Wednesday of US government data showing a substantial weakening in US demand.

Total US product demand averaged 19.02m b/d over the past four weeks, down 7.1 per cent compared with the same period a year ago.

The US data also showed crude stocks up 4.3m barrels last week, above the consensus forecast for a rise of 2.4m barrels, helped by a recovery in imports, up by a substantial 1.85m b/d to average 8.99m b/d last week.

Refineries returning to work after hurricane Ike pushed refinery utilisation up 5.6 percentage points to 72.3 per cent, recovering from the previous week’s record low of just 66.7 per cent.

On Thursday, Nymex October heating oil traded 2.8 cents lower at $2.8148 a gallon. US petrol stocks produced a surprise for traders with an increase of 900,000 barrels, confounding the consensus market forecast for a 1.6m barrel decline.

After falling for nine previous weeks, US crude stocks had shrunk to their lowest levels since 1967, but dealers were uncertain whether the increase in Wednesday’s data marked the start of a new trend.

There was further evidence of weakness in US petrol consumption with gasoline demand averaging 8.87m b/d over the past four weeks, down 4.5 per cent compared with the same period last year.

Gold traded at $865.60 a troy ounce, ranging between a low of $863.75 and a high of $874.75, after ending trading in New York on Wednesday at $868.75.

Gold sales by European central banks in the year to September 26 were provisionally estimated at 357.2 tonnes by the The World Gold Council, the lowest since the Central Bank Gold Agreement was signed in 1999 and well below the 500 tonnes annual limit. The WGC said gold sales in the current year could be even lower, unless a major new seller appeared.

TradingEconomics.com, Financial Times
10/2/2008 5:15:58 AM