Crude oil prices down, gold up
January 21, 2009
Crude futures for March and beyond sank on Tuesday, revealing broad pessimism in the markets over energy demand in the foreseeable future.
A limited number of traders took advantage of the February contract, which expired on Tuesday, the only month that saw prices rise.
Crude prices have fallen as the place to store it has thinned, with millions of barrels of unwanted oil now being stored at sea or in facilities on land.
Light, sweet crude for February delivery rose $2.23 to settle at $38.74 per barrel on the New York Mercantile Exchange.
The March contract, where the vast majority of trading took place, tumbled 4.1 per cent, or $US1.73, to settle at $US40.84.
The phenomenon is what traders call a "contango," where oil that must delivered in the next few weeks is cheaper than in the months ahead.
The February contract has fallen about one-third in two weeks because of burgeoning supplies at Cushing, Oklahoma, the delivery point for the Nymex.
Weighing on all the contracts is a severe recession in developed countries and a slump in global oil demand. Hundreds of US companies report fourth quarter earnings this week and could cement fears that the global economy is worsening.
In London, the March Brent contract fell $US1.25 to $US43.55 on the ICE Futures exchange.
In other Nymex trading, gasoline futures fell 5.23 cents to $US1.1149 a gallon. Heating oil dropped 8.53 cents to $US1.3881 a gallon while natural gas for February delivery slid 12.7 cents to $US4.674 per 1,000 cubic feet.
COMEX
Gold prices rose to their highest in more than a week on speculation that the recession will deepen as banks continue to fail, boosting the appeal of the precious metal as a haven. Silver declined.
Gold futures for February delivery rose $US15.30, or 1.8 per cent, to $US855.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $866.60, the highest since January 9.
Silver futures for March delivery fell 4 cents, or 0.4 per cent, to $US11.175 an ounce.
Equities fell around the world, and the Reuters/Jefferies CRB Index of 19 raw materials dropped as much as 2.2 per cent. The dollar rose the most in a month against a weighted basket of six major currencies.
Gold generally moves in the opposite direction of the dollar. On days when they move in tandem, investors are seeking safety.
Gold futures reached an all-time high of $1,033.90 on March 17. Futures averaged $873.98 last year.
© 2009 AAP
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