Crude oil dwindled more than 2% as a stronger dollar weighed and weaker equities raised concern about the economy and a potential rebound in energy demand. Wall Street had a weak opening, which added to the pressure on crude from the dollar's moving up some. Investors have scoured economic data in recent months for signs of a recovery that might boost global energy demand. The dollar rose against the euro, moving up from 15- month lows earlier in the week. U.S. stocks fell, with all major indexes down more than 1% on weakness in the technology and health insurance sectors. Crude stocks fell a more than expected 900,000 barrels and while distillate stocks including diesel and heating oil fell 300,000 barrels this was less than analyst projections. Furthermore traders said mild weather in the United States and high global oil products stocks held in storage on land and on floating vessels would limit oil's potential upside. Floating stocks of oil products, mostly distillates, are set to surge to over 97 million barrels by the end of the year, according to Reuters estimates. On the supply side, the Organization of the Petroleum Exporting Countries should hold oil output steady when it meets in December as current prices do not suggest the need to change supply, the head of Libya's National Oil Corporation.
Precious metals traded seesaw as a stronger dollar amid risk averse sentiment prompted the bullion market to take a breather after a sharp rally. Metals highly pressured by a higher dollar and yen, as declines in equities revived the safe haven appeal of the U.S. and Japanese currencies. Bullion sold off together with oil and other commodities as Wall Street falls more than 1.5%. Gold sales in the first year of the third Central Bank Gold Agreement, which began on September 27, have reached only 1.5 tonnes so far according to the World Gold Council.
Copper prices remains steady after touching 14-month highs, weighed down by a stronger dollar and investor concerns that prices had run ahead of weak fundamentals. Greenback rose against a basket of currencies, making dollar priced metals more expensive for non-U.S. investors. Also weighing on copper is the equities, seen as indicating sentiment over future economic growth. Highlighting the poor fundamentals, latest LME data showed copper stocks rose 6,450 tonnes to total 420,550, their highest since late April. Shanghai copper stocks are at their highest in five-and-a-half years. Copper prices have surged more than 120 percent this year, benefiting from dollar weakness, Chinese buying and new investor cash and improving economic data. Copper is up about 4 percent this week, its biggest gain in nearly a month, although the metal failed to rise past $7,000 as poor U.S. housing data rattled investors. Also, workers at Chile's massive Chuquicamata mine asked state copper giant Codelco for a 7.5% salary hike, in contract talks that could set a tough precedent for the world's top producer.
