Oil slide as Opec sits tight

(MENAFN- Khaleej Times) World oil prices slid last week as Opec decided against cutting its output target, while a boost for the dollar also weighed on commodities, including gold.

Oil

Prices fell throughout the week on expectations that the Organisation of Petroleum Exporting Countries would maintain its crude oil output ceiling, which turned out to be the case following a meeting on Friday.Opec stuck to its strategy of preserving market share faced with cheaper competition from the US shale energy boom.

The organisation, which has traditionally defended price levels by cutting output if needed, dramatically switched strategy last November when it opted to leave production unchanged - despite a dramatic oil price collapse that slashed revenues for its members. Member countries however declared they would be happier with higher prices than is currently the case, to between $75 and $80 a barrel, to boost revenues and help their public finances. Opec is also mindful however that high prices can weigh on economic growth.

By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in July slid to $61.15 a barrel from $64.35 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July dropped to $57.54 a barrel from $58.52 a week earlier.

Precious metals

Gold prices hit a near three-month low on Friday at $1,162.75 an ounce. "Dollar strength relative the euro looks like it will remain all-important, and this has been the main factor in the latest positioning shift among commodity investors," UniCredit analysts said in a note to clients.

A stronger US unit makes dollar-denominated commodities such as gold more expensive for holders of rival currencies, denting demand.

In a report that gives the Federal Reserve more reason to move toward an interest rate hike in the coming months, the Labor Department said on Friday that the economy pumped out 280,000 jobs in May, far more than expected and well above the past year's pace of 251,000 a month.

"The US labour market finally came out of its winter doldrums," said Harm Bandholz, chief US economist at UniCredit.

"The re-acceleration in employment gains is supporting the notion that the first-quarter weakness of the labour market and the economy in general was indeed transitory."

By Friday on the London Bullion Market, the price of gold dropped to $1,164.60 an ounce from $1,191.40 a week earlier.

Silver fell to $16.15 an ounce from $16.67.

On the London Platinum and Palladium Market, platinum slipped to $1,092 an ounce from $1,115.

Palladium decreased to $751 an ounce from $783.

Base metals

Base or industrial metals prices mostly dropped as the dollar strengthened while copper futures were hit also by concerns about weaker Chinese demand.

"Prices are under pressure due to fears of an imminent slowdown in demand in China, as the second quarter - traditionally a period of strong demand - has now passed its peak," said analysts at Commerzbank. By Friday on the London Metal Exchange, copper for delivery in three months slipped to $5,919.50 a tonne from $6,071.50 a week earlier.

Three-month aluminium fell to $1,730 a tonne from $1,748.

Three-month lead decreased to $1,913 a tonne from $1,972.50.

Three-month tin declined to $15,210 a tonne from $15,450.

Three-month nickel increased to $12,905 a tonne from $12,745.

Three-month zinc slid to $2,137.50 a tonne from $2,207.

Cocoa

Prices dipped a week after hitting four-year highs in London on tight supply worries.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in July fell to £2,094 a tonne from £2,126 a week earlier.

On the ICE Futures US exchange, cocoa for July slipped to $3,092 a tonne from $3,121.

Sugar

The market steadied after tumbling to six-year lows the week before. By Friday on LIFFE, a tonne of white sugar for delivery in August edged up to $351.20 from $350.10 a week earlier.On ICE Futures US, unrefined sugar for July inched up to 12.09 US cents a pound from 12.04 US cents.