COMMODITIES-US crude hits 2013 lows; natgas rallies

Mon Mar 4, 2013 5:51pm EST

* Oversupply, slowing China growth weigh on oil prices
    * Gold down as holdings in SPDR ETF continue to decline
    * Copper up on bargain-hunting activity
    * Natgas rallies on cold weather; sugar, coffee up too

    By Barani Krishnan
    NEW YORK, March 4 (Reuters) - U.S. crude oil hit its lowest
level in 2013 and settled down for a third straight session on
Monday on signs of an over-supplied market and slowing China
growth, while gold fell as demand waned for bullion-backed
exchange-traded funds.
    Copper rebounded from a three-month low on
bargain-hunting activity, joining a host of other commodities
that bucked the trend in oil and gold.
    Natural gas and arabica coffee each rose
about 2 percent or more to lift the 19-commodity Thomson
Reuters-Jefferies CRB index to its best close in more
than a week.
    U.S. gas prices rose on cold weather across most of the
United States.
    Coffee gained on short-covering and commercial buying.
 
    
    OIL DOWN ON CHINA, RISING STOCKPILES
    U.S. crude oil futures fell in reaction to slowing growth in
China and evidence of rising crude stockpiles in the United
States.
    China reported over the weekend that its services sector
expanded at the slowest pace in five months in February, and
factory growth also cooled to multi-month lows. 
    In the United States, automatic government spending cuts,
known as the "sequester," were triggered on Friday as lawmakers
failed to agree on a resolution to prevent them. 
    According to the International Monetary Fund, the U.S.
spending cuts could cost the world's biggest oil consumer about
0.5 percent of its economic growth, a factor that could weigh on
global oil demand.
    Concerns over the prospects of the euro zone's recovery were
highlighted as the region's sentiment tumbled in March, breaking
a six-month trend of gains. 
    "Economic sentiment has shifted, and we're also seeing the
first stages of long liquidation in the oil market. Money
managers had increased their exposure (to oil) a lot over a ten
week period," said energy analyst Tim Evans at Citi Futures in
New York.
    "They are now recognizing that we don't have physical demand
to justify higher price levels."
    U.S. crude oil's front-month contract fell 56 cents
to settle at $90.12 a barrel. It slid below $90 during the
session, the first time since December, and has lost around $8 
over the last month.
    London-traded Brent crude ended down 31 cents at
$110.09 a barrel, falling for a fifth straight session.
    
    GOLD DOWN AS ETF DEMAND SLIPS
    Gold prices eased as demand waned for gold-backed
exchange-traded funds and investors continued to digest the
effect of wide-ranging U.S. government spending cuts on bullion.
    Data showed holdings of the world's largest gold-backed ETF,
the SPDR Gold Trust GLD, posted a ninth consecutive daily
decline on Friday. 
    "February marked the largest monthly outflow across
physically backed gold exchange-traded products. Continued net
redemptions at this pace pose the largest downside risk to
prices, in our view," Suki Cooper, precious metals strategist at
Barclays Capital, said in a note.
    Spot gold XAU= was down 0.1 percent at $1,573.46 per ounce
by 4:04 p.m. EST (2104 GMT).
    
    COPPER REBOUNDS FROM 3-MONTH LOW
    Copper rose from the three-month lows hit in the previous
session, but gains were kept in check by a political stalemate
in the United States and Italy, and by plans in top consumer
China for tighter property sector controls.
    Three-month copper on the London Metal Exchange CMCU3 ended
at $7,725 a tonne, up from Friday's close of $7,700, when it
fell in intraday trade to its lowest in more than three months
at $7,652.
    China, which accounts for 40 percent of refined copper
demand, could increase required down payments and loan rates for
buyers of second homes in cities where prices are rising too
quickly, in its latest move to contain housing costs.
    Copper is used extensively in construction for wiring and
plumbing.
    Investors also had to contend with the aftermath of an
inconclusive election in Italy that has cast doubt on the euro
zone's austerity-led solution to its debt crisis, and with U.S.
spending cuts that threaten to dampen growth in the world's
largest economy.
    "There's awful lot of surprises this year and none of them
good. Relative to original expectations (U.S. spending cuts)
could easily knock 1 to 1.5 percentage points off growth," said
Nic Brown, head of commodities research at Natixis.
    On China, he added: "Real estate has been a very important
part of Chinese growth and for the authorities to be clamping
down on it even if the rest of the economy is doing well, this
is a dent in expectations for Chinese growth." 
    
 Prices at 5:11 p.m. EST (2211 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    90.25    -0.43  -0.5%   -1.7%
 Brent crude                110.20    -0.20  -0.2%   -0.8%
 Natural gas                 3.529    0.073   2.1%    5.3%
 
 US gold                   1572.40     0.10   0.0%   -6.2%
 Gold                      1573.60     0.26   0.0%   -6.0%
 US Copper                  348.30     0.15   0.0%   -4.6%
 LME Copper                7725.00    22.00   0.3%   -2.6%
 Dollar                     82.185   -0.128  -0.2%    7.1%
                             
 
 US corn                    723.00    -1.25  -0.2%    3.5%
 US soybeans               1490.25    25.75   1.8%    5.0%
 US wheat                   696.00   -17.25  -2.4%  -10.5%
 
 US Coffee                  146.65     3.30   2.3%    2.0%
 US Cocoa                  2056.00   -26.00  -1.2%   -8.1%
 US Sugar                    18.08     0.17   0.9%   -7.3%
 
 US silver                  28.496    0.006   0.0%   -5.7%
 US platinum               1566.20    -7.30  -0.5%    1.8%
 US palladium               714.45    -5.95  -0.8%    1.6%
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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