* Seaway pipeline cuts oil throughput
* Copper down on subdued China demand
* Improving global economy weighs on gold
* Raw sugar snaps 5-day decline, arabica up too
By Barani Krishnan
Jan 23 U.S. oil prices fell sharply on Wednesday
as pipeline problems raised worries that crude supplies will
swell in the country's Midwest, and soybean and grain markets
slid in reaction to forecasts for better crop weather in major
Copper and gold joined the decline as subdued
demand from China weighed on industrial metals and an improving
global economy dulled the safe-haven allure of bullion.
Soft commodities, that include coffee, sugar and cocoa,
were among the few markets that bucked the trend.
Raw sugar futures snapped a five-day decline, staging
their strongest one-day rally in six weeks after traders said
sugar appeared oversold at 2-1/2-year lows.
Arabica coffee also rebounded, on worries a
tree-killing fungus known as roya will spread in Central
America, which produces of a fifth of the world's arabica.
At the close, the Thomson Reuters-Jefferies CRB Index
, a commodity market bellwether, was down 0.3 percent,
mostly due to the 1.5 percent price drop in its biggest
component -- U.S. crude oil.
Twelve of the CRB's 19 commodities ended up, with orange
juice leading gains after a rise of more than 3 percent. Sugar
climbed more than 2 percent and arabica rose over 1 percent.
U.S. CRUDE HIT BY PIPELINE WOES
In New York, crude futures slumped in heavy trade after a
key pipeline cut throughput, raising concerns that inventories
will pile up at the Midwest delivery point for the U.S. West
Texas Intermediate (WTI) oil.
The Seaway pipeline, restarted earlier this month after
expansion work, ships crude from the Cushing, Oklahoma, delivery
point for the New York Mercantile Exchange's WTI contract to the
U.S. Gulf Coast.
Shippers received notification that the 400,000
barrel-per-day (bpd) line had cut rates to 175,000 bpd. It was
not immediately clear when full rates would be restored.
Front-month U.S. crude oil futures settled down $1.45
at $95.23 a barrel, ending a four-day run-up.
London's Brent crude, which analysts say better
reflects global oil prices, closed up 38 cents at $112.80. Brent
rose after news that U.K. unemployment fell for the 10th
consecutive quarter at the end of last year and that jobless
claims were at mid-2011 lows.
Analysts said the disparity between Brent and U.S. crude --
which stood at a Jan. 15 high of nearly $17.50 -- could widen if
WTI supplies swelled up in the Midwest.
"Stocks at Cushing are already at record levels and traders
were betting that this line would help them draw, and narrow,
the Brent-WTI spread," said Andy Lebow, vice president at
Jefferies Bache in New York.
"This could be very bearish WTI," he added.
SOY DOWN ON TECHNICAL SELLING, ARGENTINE MOISTURE
In crop markets, soybeans posted the biggest losses on
selling due to technical signals and to forecasts for welcome
moisture in Argentina's key crop areas.
"The forecast was wetter (for Argentina) in the six- to
10-day today versus yesterday," said Dan Cekander, analyst with
Newedge USA in Chicago.
Front-month soybeans traded in Chicago were down
14-3/4 cents at $14.37 per bushel.
The downturn in soybeans weighed on corn and wheat as well.
Chicago corn finished down 1 percent, or 7-3/4 cents,
at $7.20-3/4 a bushel.
Chicago wheat slid 0.6 percent, or 4-1/2 cents, to
$7.74-3/4 per bushel, after hitting its lowest price of
$7.72-3/4 since Jan. 15 in overnight trade.
Prices at 4:54 p.m. EST (2154 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 95.55 -1.13 -1.2% 4.1%
Brent crude 112.82 0.40 0.4% 1.5%
Natural gas 3.554 -0.004 -0.1% 6.1%
US gold 1686.70 -6.50 -0.4% 0.7%
Gold 1685.45 0.31 0.0% 0.7%
US Copper 368.45 -2.05 -0.6% 0.9%
LME Copper 8103.00 -30.00 -0.4% 2.2%
Dollar 79.906 0.032 0.0% 4.1%
US corn 720.75 -7.75 -1.1% 3.2%
US soybeans 1437.00 -14.75 -1.0% 1.3%
US wheat 774.75 -4.50 -0.6% -0.4%
US Coffee 150.40 1.80 1.2% 4.6%
US Cocoa 2215.00 2.00 0.1% -0.9%
US Sugar 18.50 0.38 2.1% -5.2%
US silver 32.439 0.262 0.8% 7.3%
US platinum 1691.70 -6.70 -0.4% 9.9%
US palladium 726.20 -3.70 -0.5% 3.2%