Crude oil and gold dropped on Thursday as investors shifted focus on the upcoming US budget talks after euphoria over a vote to avert the fiscal crisis subsided. However, copper hovered around a two-and-a-half month high in intraday trade on robust economic data from top consumer China, while wheat and corn stayed shy of their lowest levels since July and late June, respectively, on better crop prospects. More political showdowns on the US budget are expected in the coming months as lawmakers left unresolved a sticky issue involving $109 billion in planned spending cuts, though they raised taxes on wealthy individuals and families.
Brent crude dropped 60 cents to $111.87 a barrel intraday after rising by more than 1% on Wednesday to hit the highest since October. US crude fell 57 cents to $92.55 a barrel after closing at its highest since September on Wednesday. Some profit booking is also to be blamed, market participants said.
Analysts say oil prices may decline further in 2013 as supply is expected to cross demand. US crude output has hit a 19-year peak. Gold eased on Thursday from the two-week peak hit in the previous session, as the dollar appreciated against a basket of currencies. Spot gold fell 0.31% to $1,681.1 intraday, while US futures dropped $7 an ounce to $1,681.80.
Copper prices gained after data revealed growth in China’s services sector accelerated in December at its fastest pace in four months, strengthening expectations that a revival in the world's second-largest economy is well on course. On LME, it rose to $8,240.50 a tonne intraday, from $8,210 a tonne on Wednesday when it hit its biggest gain in more than three months.
However, corn and wheat dropped on expectations of good crops due to improving weather outlook in South America. Wheat for March delivery on the Chicago Board Of Trade was ruling around $7.53-1/2 a bushel — not far from Wednesday’s six-month low of 7.52-1/2 a bushel — while March corn dropped 0.8% to 685-1/4.