Zarqawi death sends oil prices lower

The death of an al-Qaeda leader in Iraq led to a substantial decline in crude oil prices on Thursday. Abu Musab al-Zarqawi, who has led attacks on the oil infrastructure in Iraq since the downfall of the regime of Saddam Hussein that have seen oil production there drop to about 1.8 million barrels of oil per day, was killed in an air attack outside Baghdad. Most analysts assume that now that al Zarqawi is out of the picture, oil production will be able to increase in Iraq as attacks against facilities dwindle.

Brent crude July contracts dropped $1.16 to $69.35 per barrel late in the day on the International Petroleum Exchange in London, taking the week’s losses to 4 percent so far. Meanwhile, in late morning trade on the New York Mercantile Exchange, West Texas Intermediate crude had lost $1.42 to $69.35 per barrel, its lowest price in two weeks. WTI had already dropped $1.68 on Wednesday after the release of inventory data that showed increases in stockpiles of both crude oil and gasoline.

In other commodities, gold lost 3 percent after the European Central bank raised interest rates by 25 basis points, strengthening the dollar in relation to the euro. Gold was trading at $611.30 per troy ounce, $19 dollars from Wednesday’s late quote in New York. Silver was down as well, off 50 cents to $11.25 per troy ounce.

Prices for base metals were down, as well. Copper was down 5.5 percent to $7,355 per tonne on the London Metal Exchange, a drop of $450 dollars. Aluminium was down $140 to $2,510 per tonne, while lead dropped below $1,000 per tonne for the first time this year.

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