Brent crude, copper drop as supply-halt fears reduce

Written by fe Bureau | New Delhi | Updated: Nov 24 2012, 04:33am hrs
Brent crude oil and copper dropped on Friday while gold edged up as the West Asian conflict abated and focus shifted back to macro-economic concerns in key commodity-consuming nations.

Oil dipped towards $110 a barrel as a ceasefire in Gaza remained intact, while poor outlook on Chinese demand dragged down copper, although an improvement in German business data limited losses.

Brent crude futures shed 16 cents at $110.41 a barrel in intraday trade on Friday, while US crude lost 27 cents at $87.11. The US market was closed on Thursday for the Thanksgiving holiday. Concerns about potential oil supply disruptions from West Asia, which accounts for one-third of the global oil supplies, eased after Israel started pulling back its army from Gaza.

German business sentiment reorded an unexpected rise in November after a six-month declining streak. The Munich-based Ifo think tank said its business climate index inched up to 101.4 in November, beating predictions. However, the impact of the better-than-expected German data may be short-lived, if concerns about other euro zone members, the latest being France, are not addressed.

Copper dipped on Friday on lack of any policy announcements by China to boost growth as supplies pile up in the world's top metal consumer. Three-month copper on the London Metal Exchange shed 0.15% at $7,703 per tonne at 1106 GMT.

Demand for the industrial metal has weakened this year as China recorded seven straight quarters of slowdown. Stockpiles of copper hit a record of over one million tonnes last week and are expected to swell by around 100,000 tonnes by the end of the year, which will prevent any significant rise in prices in the coming days.

However, gold prices got a boost as positive German data and expectations of an agreement to tackle the Greek debt problem drove the euro to a three-week high against the dollar. The precious metal has been tracking the euro movement closely this year. Spot gold gained 0.3% at $1,734.26 an ounce intraday, while US December gold futures rose $6.30 an ounce at $1,734.50.

The metal has gained 1.2% this week, thanks to a stronger euro, after losing 1% last week. Investors are now focussed if the US would avert a fiscal crisis and China would stage a rebound. Gold may face some resistance around $1,740 an ounce, analysts said. Gold is just a few dollars shy of its 50-day moving average of $1,741 an ounce, and a key technical level is lurking at $1,739.10, UBS said in a note.

Similarly, silver gained 0.5% at $33.46 an ounce. The white metal has already outperformed gold to soar by 3.5% this week, driving the gold-silver ratio that measures the number of silver ounces required to buy an ounce of gold to a six-week low of 51.9. Spot platinum stayed flat at $1,580 an ounce, while spot palladium was almost unchanged at $654.75 an ounce.