Oil, metals prices decline

Prices for crude oil and metals dropped on Wednesday after having advanced substantially on Tuesday.

The US Energy Information Administration reported that crude oil inventories were down by 3 million barrels in the week ending May 19. The decline was much higher than the 800,000 barrel drop that had been expected. However, stockpiles of crude remain plentiful and inventories of gasoline were up by 2.1 million barrels during the week, greater than the 1.4 million barrel increase that analysts had predicted.

July contracts for Brent crude on the International Petroleum Exchange were down 32 cents after the EIA report to $70.68 per barrel, while West Texas Intermediate for July delivery lost 36 cents to $71.40 per barrel on the New York Mercantile Exchange. Meanwhile, Nymex unleaded gasoline June contracts lost a bit over 2 cents to $2.0875 per gallon.

Demand for gasoline was only up 0.3 percent over the same time last year, and the current high pump prices for gasoline seem to be cutting demand slightly. Still, there are concerns that refineries will be able to keep up with demand during the summer driving season, as refinery utilization was down by 0.1 percent to 89.7 percent. To compensate for the decline in refining, the US imported gasoline at the second highest weekly rate in history.

Among metals, copper was down by 7.5 percent to $8,217 per tonne after a record one-day price gain on Tuesday. The drop in price came even though Codelco warned that its production would drop by 6.5 percent during the year as it cut its long-term annual production target to 2.5 million tonnes by 2020, down from its previous target of 3 million tonnes by 2015. One prediction said demand could be hurt by slower growth in construction, possibly causing copper prices to drop by 20 percent.

In other base metals, zinc dropped 2.2 percent to $3,470 per tonne even though London Metal Exchange inventories dropped by 950 tonnes. Aluminium was down 4.5 percent to $2,740 per tonne despite strike worries. Nickel was slightly lower at $21,950 per tonne after having hit a new record high price of $22,320 per tonne earlier in the day.

Precious metals were lower as well. Gold dropped 4.3 percent to $642.50 per troy ounce. Silver declined by 2.4 percent to $12.62 per troy ounce, platinum dropped 2.7 percent to $1,280 per troy ounce, and palladium lost 3.9 percent to $345 per troy ounce.

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