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Commodity prices see sharp fall | Commodity prices see sharp fall |
(about 3 hours later) | |
Commodity prices fell on Thursday for a fourth day, following weak economic news from Europe and the US. | Commodity prices fell on Thursday for a fourth day, following weak economic news from Europe and the US. |
Oil prices were down 10% at one stage, with US light, sweet crude ending the day below $100 a barrel. | |
US weekly jobless claims hit an eight-month high last week, while German industrial orders fell unexpectedly. | |
There are also concerns about what will happen to the US economy when the latest round of quantitative easing, known as QE2, ends. | There are also concerns about what will happen to the US economy when the latest round of quantitative easing, known as QE2, ends. |
"Crude oil is selling off sharply for two primary reasons: QE2 is coming to an end in June and without a QE3 behind it, it will take liquidity out of the market, hurting risky asset classes such as commodities," said Chris Jarvis at Caprock Risk Management in New Hampshire. | "Crude oil is selling off sharply for two primary reasons: QE2 is coming to an end in June and without a QE3 behind it, it will take liquidity out of the market, hurting risky asset classes such as commodities," said Chris Jarvis at Caprock Risk Management in New Hampshire. |
"With Osama Bin Laden dead, the market is adjusting the geopolitical risk premium down accordingly." | "With Osama Bin Laden dead, the market is adjusting the geopolitical risk premium down accordingly." |
Precious metals have also been hit, with silver falling another 6% and heading towards its biggest weekly fall since 1983. | |
The price of silver has fallen by more than 20% from its record high near $50 an ounce last Thursday. | The price of silver has fallen by more than 20% from its record high near $50 an ounce last Thursday. |
Some of the sell-off is due to an unprecedented raising of trading costs by CME Group, which oversees much speculative trading in silver. | Some of the sell-off is due to an unprecedented raising of trading costs by CME Group, which oversees much speculative trading in silver. |
The speculative sell-off in silver set off other commodities, according to Luis Rangel, vice-president for commodity derivatives at ICAP North America. | The speculative sell-off in silver set off other commodities, according to Luis Rangel, vice-president for commodity derivatives at ICAP North America. |
"It was sort of the ring leader and it's started to spread like a contagion," he said. | "It was sort of the ring leader and it's started to spread like a contagion," he said. |
Sugar and cocoa were also among the fallers. | Sugar and cocoa were also among the fallers. |
Oil-related shares also fell, with oil companies leading the fallers in New York. | Oil-related shares also fell, with oil companies leading the fallers in New York. |
Exxon Mobil and Chevron were down by 2.6% and 1.8% respectively. |
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