July 10, 2012 / 9:57 PM / 7 years ago

COMMODITIES-Oil drops as Norway strike ends; PFG crisis starts

* End of Norway strike offsets EU deal for Spain
    * Worries about futures broker PFG rattles investors
    * Oil prices down 2 pct, Brent back below $100
    * Gold erases early rally to end lower
    * Soy retreats from record highs, corn retreats

    By Barani Krishnan
    NEW YORK, July 10 (Reuters) - Oil prices fell more than 2
percent on Tuesday after Norway's oil industry ended its
three-week long strike, and metals and agricultural markets fell
too, highlighting the fragility of the recent rebound in
    Jitters across commodities markets on news that client funds
were missing from another U.S. futures brokerage, PFGBest, kept
investors away, analysts said. 
    Last year's fiasco at MF Global remains fresh in investors
    The dollar's strength against other major currencies 
also dissuaded holders of the euro and other
denominations from buying commodities priced in the greenback.
    Soybeans retreated from Monday's record high and corn backed
away from a 13-month high due to forecasts for rain by the end
of the week in some parched growing areas of the U.S. Midwest.
    White sugar futures in London was one of the few
commodities that ended up, hitting a 3-1/2 month high as brisk
consumer buying and lingering problems in top growers Brazil and
India stoked the sweetener's steady advance. 
    The 19-commodity Thomson Reuters-Jefferies CRB index 
closed down 1.4 percent. That erased most of the previous
session's 2 percent gain largely due to the crisis in Norway
pushing up oil prices then.
    Since trading for the third quarter began this month,
commodities have turned more volatile compared to their broadly
lower trend in previous months as developments in European debt
counteracted with other market concerns and fundamentals.
    Gold initially rallied about 1 percent in Tuesday's trade
after EU ministers agreed to provide up to 100 billion euros
($123 billion) in aid to ailing Spanish lenders. The spot price
of gold later closed about 1.5 percent down after broker PFGBest
told its customers their accounts had been frozen.
    Oil markets fell after Norway's government, empowered by law
to force striking workers back on the job, ordered a settlement
late on Monday of a dispute between oil workers and employers.
    The government intervention came as the strike entered its
third week and minutes before an industry-imposed lockout.    
It restored more than 2 million barrels per day (bpd) of
Norwegian crude, natural gas liquids and condensate to markets.
  "The intervention means that a major supply disruption is
prevented," Oliver Jakob, managing director at consultancy
Petromatrix, wrote in a note.
    Benchmark Brent crude oil in London returned to
below $100 per barrel, tumbling $2.35 to settle at $97.97 a
barrel. U.S. crude fell $2.08 to finish at $83.91.
    The selloff in gold came after U.S. investment bank
Jefferies Group said it has started to liquidate trading
positions of PFGBest. The founder and chairman of Iowa-based
PFGBest, Russell R. Wasendorf Sr., was reported to be in coma
after an apparent suicide attempt on Monday. 
    "It's déjà vu all over again," said John Roe, co-founder of
the Commodity Customer Coalition (CCC). The CCC was set up in
the aftermath of MF Global's collapse last October to help
clients recoup their money.
    In its dying days, MF Global dipped into customer funds to
help meet margin calls, investigators believe.
    The spot price of gold, which tracks trades in
bullion, fell 1.3 percent to below $1,566 an ounce from a
session high of $1,600.90 earlier in the day. 
    Copper's losses represented the fourth decline in five days.
 Three-month copper on the London Metal Exchange shed
$70 to end at $7,490 a tonne after dealing between $7,482 and
    On the agricultural front, November, the most-active
contract in soybeans, shed 9-1/4 cents, or 0.6 percent, to
$15.38-1/2 a bushel in Chicago trade. Soybeans' thinly traded
spot contract, which climbed to a record top of $16.79-1/2
a bushel in the last session, fell 16-1/4 cents, or 1 percent,
to $16.48-3/4 on Tuesday.
    In corn, the December contract fell 12-1/2 cents, or
1.7 percent, to $7.17-1/2 a bushel.
 Prices at 5:17 p.m. EDT (2117 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    84.02    -1.97  -2.3%  -15.0%
 Brent crude                 97.97    -2.35  -2.3%   -8.8%
 Natural gas                 2.737   -0.146  -5.1%   -8.4%
 US gold                   1580.90    -9.30  -0.6%    0.9%
 Gold                      1564.50   -22.15  -1.4%    0.0%
 US Copper                  339.80    -3.35  -1.0%   -1.1%
 Dollar                     83.400    0.239   0.3%    4.0%
 CRB                       288.650   -4.060  -1.4%   -5.5%
 US corn                    717.50   -12.50  -1.7%   11.0%
 US soybeans               1557.75   -15.25  -1.0%   30.0%
 US wheat                   835.25    -8.50  -1.0%   28.0%
 US Coffee                  184.50     2.15   1.2%  -19.1%
 US Cocoa                  2307.00   -12.00  -0.5%    9.4%
 US Sugar                    22.92    -0.04  -0.2%   -1.3%
 US silver                  26.882   -0.562  -2.0%   -3.7%
 US platinum               1428.70   -16.20  -1.1%    1.7%
 US palladium               576.60    -7.30  -1.3%  -12.1%

 (Editing by Bob Burgdorfer)
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