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Energy prices fall, copper and industrial metals drop amid concerns about economic growth

Energy prices fall, copper and industrial metals drop amid concerns about economic growth

Commodities prices sagged broadly Tuesday, following Wall Street lower amid persistent concerns about the availability of credit and the pace of economic growth.
Gold prices declined as the dollar climbed against other world currencies, while agriculture futures continued to give back some of last week's strong gains. Energy prices also dipped.
Investors have been keen for a sense of the Federal Reserve's bent on its benchmark interest rate. Tuesday's release of the minutes of the Fed's closed-door meeting on Aug. 7 confirmed that the central bank believes that crimped credit conditions could stifle economic growth and "might require a policy response." The minutes showed the Fed "expected a return to more normal market conditions," but also noted "a further deterioration in financial conditions could not be ruled out."
However, the central bank didn't discuss a cut in its benchmark federal funds rate, which has been held steady at 5.25 percent for more than a year. Wall Street wants a rate cut, which would feasibly make financing easier to acquire and ease credit concerns. However, it could also be viewed by the commodities market as a sign that the Fed believes economic growth is slowing _ which could raise concerns about the strength of demand for raw materials. Investors have been hesitant to make large bets in either direction ahead of the Fed's Sept. 18 meeting on interest rates.
The open-outcry trading sessions at most commodities markets closed Tuesday before the release of the Fed meeting minutes. Traders were expected to react to the minutes when Wednesday's sessions opened.
Industrial metals prices mostly declined Monday on the London Metal Exchange. The LME posted rising inventories of nickel _ amid waning demand from stainless steel producers _ and recorded a hefty increase in copper inventories. Nymex copper for December delivery fell 4.35 cents to $3.3125 a pound, reversing course after seven straight gaining sessions.
"We expect sizable rallies in metals, such as the one we saw last Friday, to have trouble sustaining themselves, as the metals complex will be working under the shadow of jittery global equity markets and uncertain U.S. economic data," wrote Edward Meir, MF Global analyst, in a report.
Meir also stressed that the latest economic data hasn't yet reflected the credit contraction of the past month or the volatility that followed on Wall Street. Economic readings released in September and October may tell a different story than the relatively strong data from July suggest.
Investors weighed one of the first available reports on August economic activity Tuesday. The Conference Board reported that consumer confidence weakened in August but beat the market's relatively weak expectations. The board's Consumer Confidence Index declined to 105.0 from 111.9 in July, but analysts had forecast a sharper drop to 104.5.
Consumer spending accounts for two-thirds of economic growth.
In New York, oil prices slipped Tuesday as some traders cashed in following three days of strong gains. If shrinking credit or Wall Street turmoil have permeated the real economy, it would show up in reports of August economic data, the bulk of which won't be turned out for several more weeks, said Wachovia Corp. energy economist Jason Schenker.
"On the speculative side, there is a still a good deal of market concern," Schenker said. "If speculators have concerns about growth, they don't want to take risky plays."
Traders are also awaiting petroleum inventory data, due out Wednesday from the Energy and Information Administration. Analysts surveyed by Dow Jones Newswires expect to see a 1.8-million-barrel decline in gasoline stockpiles _ on top of a huge 5.7-million-barrel draw a week earlier _ and project a drawdown of 800,000 barrels of crude.
October light, sweet crude shed 24 cents to settle at $71.73 a barrel on the New York Mercantile Exchange. Gasoline futures for September, which expire at the end of the week, fell 2.39 cents to $2.0154 a gallon.
Gold and silver prices dropped as investors moved assets back into the U.S. dollar, which climbed Monday against other major world currencies, including the 13-nation euro and British pound.
December gold fell $2.70 to close at $673.50 an ounce, while December silver finished flat at $11.924 an ounce.
Elsewhere, agriculture futures mostly declined on the Chicago Board of Trade. Wheat rebounded from early losses to eke out a gain at the close.
Wheat for December delivery edged up 0.25 cent to settle at $7.38 a bushel. Wheat prices have surged this year as global supplies have dwindled amid continued strong demand. That wheat prices managed to slip only modestly on Monday after last week's sharp gains "is a testimony to the strength" of the market, said DTN analyst Gary Wilhelmi.
Wheat "could go down 50 cents or $1, but it's being underpinned by the fact that every time it pulls back, buyers step in," he said.
Corn for December delivery fell 8.25 cents to $3.4475 a bushel, while soybeans for November delivery finished down 0.5 cent at $8.7225 a bushel.


Updated : 2021-02-27 05:55 GMT+08:00