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COMMODITIES-Oil drops on Fed fears, mine restart pressures copper
May 29, 2013 / 8:16 PM / 4 years ago

COMMODITIES-Oil drops on Fed fears, mine restart pressures copper

* Brent, U.S. crude down 2 pct; biggest slide in a month
    * Imminent restart of Grasberg mine weighs on copper
    * Soybeans slip on news of China cancelling order from U.S.
    * Gold ticks higher as dollar falls, coffee rebounds too

    By Barani Krishnan
    NEW YORK, May 29 (Reuters) - Oil prices slid their most in a
month on Wednesday, falling with Wall Street stocks on worries
the Federal Reserve could phase out its stimulus, while copper
came under pressure from the imminent restart of the
second-largest mine for the metal. 
    Soybeans fell, cutting short the previous session's rally,
on news that top buyer China had canceled a large order for U.S.
soy. 
    Gold ticked higher after losses in the dollar. Arabica
coffee consolidated above Tuesday's more than 3-1/2-year low,
also helping to limit the commodity complex's losses. 
 
    The Thomson Reuters-Jefferies CRB index, a global
indicator for commodity prices, settled down more than half a
percent, hitting a near one-month low. Twelve of the CRB's 19
components fell, with crude oil and gasoline losing about 2
percent each.
    
    OIL FOLLOWS STOCK MARKET
    Crude oil tumbled in a high-volume selloff that sent prices
down more than $1 a barrel in 15 minutes.  
    Benchmark Brent crude from Europe's North Sea 
settled down $1.80, or 1.7 percent, at $102.43 a barrel after
rising more than $2 in the previous session to the highest since
May 21. 
    U.S. crude shed $1.88, or 2 percent, to $93.13 a
barrel.
    It was the sharpest price decline since May 1 for both crude
grades.
    "We're following the risk trade, which is the stock market,"
said Richard Ilczyszyn, chief market strategist and founder of
iitrader.com LLC in Chicago.
    U.S. stocks retreated from Tuesday's record highs as
government bonds rallied on expectations the Fed will pare its
monetary stimulus amid an improving domestic economy. 
    Many of the peaks in commodity prices since the financial
crisis have been driven by the hundreds of billions of dollars
in stimulus money created by the U.S. central bank. 
    Wednesday's pullback leaves Brent and U.S. crude in the
middle of the bands in which they have hovered through May,
highlighting a lack of trading conviction amid uneven global
economic data and concerns that signs of recovery in the United
States could curb the Fed's liquidity program. 
    "It's become a fairly tight trading range," said Andy Lebow,
vice president at Jefferies Bache in New York.  
    "U.S. crude is settling into the $92 to $98 range, and Brent
too is kind of locked into the $100 to $106 range." 
    
    COPPER WEAKENED BY GRASBERG NEWS
    Copper's key three-month futures contract in London 
ended down nearly 1 percent at $7,265 a tonne, erasing the
previous session's gains and heading toward a second weekly
loss. 
    Freeport McMoRan Copper & Gold Inc said it would
resume some operations at its Grasberg mine in Indonesia, with
production possible in the next two to three days. 
    Operations at the mine, the world's No. 2 for copper, have
been suspended since a tunnel collapse killed 28 people more
than two weeks ago. 
    Uncertainty over the global economy also pressured copper.
    The OECD reduced its world growth estimate for this year to
3.1 percent from a previous 3.4 percent. The International
Monetary Fund trimmed its forecast for Chinese growth to 7.75
percent this year from 8 percent. 
 
    
 Prices at 3:34 p.m. EDT (1934 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    93.16    -1.85  -2.0%    1.5%
 Brent crude                102.45    -1.78  -1.7%   -7.8%
 Natural gas                 4.148   -0.026  -0.6%   23.8%
 
 US gold                   1391.30    12.40   0.9%  -17.0%
 Gold                      1392.76    12.51   0.9%  -16.8%
 US Copper                    3.30    -0.02  -0.5%  -99.1%
 LME Copper                7265.00   -58.00  -0.8%   -8.4%
 Dollar                     83.653   -0.447  -0.5%    9.0%
                             
 
 US corn                    665.00    -1.50  -0.2%   -4.8%
 US soybeans               1501.75    -7.50  -0.5%    5.9%
 US wheat                   702.75     9.00   1.3%   -9.7%
 
 US Coffee                  127.60     1.15   0.9%  -11.3%
 US Cocoa                  2210.00     5.00   0.2%   -1.2%
 US Sugar                    16.67    -0.05  -0.3%  -14.6%
 
 US silver                   0.225    0.003   1.2%  -99.3%
 US platinum               1453.00    -8.80  -0.6%   -5.6%
 US palladium               747.80    -9.20  -1.2%    6.3%

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