Oil at four-year low below $83 on economic worries

Written by fe Bureau | New Delhi | Updated: Oct 17 2014, 07:28am hrs
Brent crude dropped to a four-year low below $83 a barrel in intraday trade on Thursday, losing 28% since its June peak and over 25% so far in 2014, as the fight to capture the export market prompted key producers, especially in the Organization of Petroleum Exporting Countries (Opec), to refrain from production cuts even when demand crawled.

Copper hit a six-month low intraday, weighing on other base metals, mirroring a broader fall across stock and commodity markets, while safe-haven gold saw some volatility as well. The Thomson Reuters Jefferies CRB index, which tracks the movement of 19 commodities, was down 0.95% at 271.96 by 8.20 ET on Thursday.

Brent crude for November hit $82.72 a barrel, the lowest since November 2010, before clawing back some losses to trade at $83.16 a barrel by 0914 GMT, still down 62 cents. US crude shed $1.01 to $80.77 a barrel.

Breathing easy is a country like India, which meets 78% of its oil demand through purchases from overseas, as the price of the Indian crude basket dropped to $83.85 per barrel as of Wednesday, compared with $87.46 a day before and down 9% from the average price of $92.02 in the fortnight through October 10.

Brent crude has has fallen from a nine-month high of $115.71 hit in June when Islamic State's insurgency into Iraq threatened to disrupt supplies.Prices have since slipped on concerns about global economic growth and downward revision in oil demand forecasts by the International Energy Agency. Plentiful supplies in the US further drove down prices. According to industry group American Petroleum Institute, US crude inventories rose 10.2 million barrels to 370.7 million barrels.

A request by Venezuela for an emergency meeting of the Opec ahead of the group's scheduled gathering on November 27 believed to be aimed at working out measures to stem the slide in prices hasn't elicited any response from other members yet.

Base metals hit multi-month lows

Copper prices crashed to their lowest in six months in intraday trade on lingering concerns about economic growth in China, the world's largest metal consumer. Three-month copper on London Metal Exchange dropped 1.1% to $6.568 a tonne at 0956 GMT, having hit $6,558--its lowest since mid-April earlier in the session and extending a 2% fall in the last session.

Reports that Chinese firms could effect a 7% cut in capital spending this year, the sharpest annual fall since the financial crisis, spooked the market. A decline in US retail sales in September, released on Wednesday, just worsened slowdown fears and helped stoke a sell-off on Wall Street.

Other base metals also tracked the drop in copper on Thursday. Lead hit its meanest in 17 months at $1,962.25, while nickel declined to a seven-month trough of $15,374 and tin to $19,360, a 15-month low.

Gold hovers around a one-month high hit in the last session, with spot gold gaining 61 cents at $1,242.63 an ounce by 7.43 ET. The metal had scaled its peak since September 11 at $1,249.30 on Wednesday, as investors sought to flock to haven assets in view of a fall in stocks and other commodities. December gold futures in the US, however, eased from Wednesday's one-month high to trade at $1,243 per ounce, down $1.80 an ounce.