Oil hits 5-year lows in longest losing streak since 2008 crisis

Tuesday, 2 December 2014 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Oil fell more than $ 2 a barrel to a five-year low in Asian trade on Monday, extending a steep sell-off after OPEC decided not to cut production last week, keeping markets well supplied. Both US crude and Brent have fallen for five straight months, oil’s longest losing streak since the 2008 financial crisis. “Just when the market was thinking that a four-year low for crude oil was bad enough, we have hit a five-year low after the OPEC meeting,” Phillip Futures analysts said in a note. US crude tumbled to near $ 64, dragging Brent down below $ 70, after Saudi Arabia’s oil minister told fellow OPEC members last week that they must combat the US shale oil boom. “They (OPEC) can get by at $ 60 a barrel, but that price would knock out a fair whack of the competition – much US shale oil for example – as well as put investment in future capacity growth firmly on the back-burner,” ANZ analysts said in a note.

Gold rebounds 1% from early slump after Swiss vote Reuters: Gold rebounded sharply on Monday from the 2% losses it posted after Switzerland voted against a proposal to boost its gold reserves, as lower prices tempted fresh buyers and Moody’s cut its rating on Japan. Swiss voters overwhelmingly rejected on Sunday a proposal to boost central bank gold reserves, providing a new trigger for sell-offs in an already nervous market. Gold slid as low as $ 1,142.91, before bouncing back in European trading hours. Spot gold rebounded to a high of $ 1,182.70 an ounce, and was up 1% at $ 1,179.00 an ounce at 1040 GMT. US gold futures for December delivery were up $ 2 an ounce at $ 1,177.50. News that global rating agency Moody’s had cut Japan’s sovereign rating, sending the Japanese yen to a seven-year low against the euro, stimulated some demand for gold, traders said. “The market had been focusing on the Swiss referendum, and the reaction to that was overdone on the downside,” Simon Weeks, head of precious metals at the Bank of Nova Scotia, said. “Then the Japanese rate cut caught a raw nerve.” Risk appetite was slack on the wider markets, with European stocks falling 0.5% and oil prices hitting their lowest in five years, hurt by slowing factory activity in China and Europe. Investment interest in gold has been lacklustre. Holdings of the world’s largest gold-backed exchange-traded fund, New York listed SPDR Gold Shares, fell another 1.2 tonnes on Friday to 717.6 tonnes, a 6-year low. Gold received supportive news from the physical markets, however, where India, the second biggest consumer of the metal, eased curbs on imports on Friday. In top consumer China, premiums were steady at about $ 1-$ 2, reflecting strong buying interest. Silver was up 2.7% at $ 15.83 an ounce, having earlier rallied as much as 6% to a peak of $ 16.34. Overnight it slid as low as $ 14.42, while US silver futures tumbled as much as 9%.

“They’re playing the long game, banking that others can’t.” Brent hit a low of $ 67.82 a barrel, the lowest since October 2009, and was down $ 1.71 at $ 68.44 a barrel by 0733 GMT. US crude fell $ 1.49 to $ 64.66 a barrel, after earlier slipping to an intraday low of $ 64.10, the lowest since July 2009. Oil-producing countries from Iraq to Nigeria are revising their 2015 budgets to reflect lower prices. Iran refrained from protesting against OPEC’s decision to retain its production ceiling to maintain group solidarity, even though the move will not benefit all members, Iranian oil minister said in local media reports. Slower than expected growth in China’s manufacturing sector may add further downward pressure on oil. China’s official Purchasing Managers’ Index (PMI) slipped to 50.3 in November, a government study showed on Monday, lower than analysts’ forecasts of 50.6. “It’s not too bad a miss, but probably won’t help (oil) too much,” Ric Spooner, chief analyst at CMC Markets in Sydney said. “It’s best not to try to pick bottoms at this stage.” Spooner said the next support levels for Brent are at $ 68 and $ 64 a barrel. If West Texas Intermediate crude futures fall below $ 63.90 a barrel, the next support level would be at $ 50, he said.