Crude oil prices fall despite production cuts

Despite announcements from Qatar and Algeria that both countries will support further OPEC production cuts in order to cut what the oil cartel sees as an oversupply on the market, crude oil prices were lower on Monday. Brent crude for January delivery was 23 cents lower to $58.76 per barrel, while West Texas Intermediate crude January contracts dropped 44 cents to $58.54 per barrel. According to Goldman Sachs, the lower prices are an isolated phenomenon in the United States and other markets are already adjusting to the OPEC cuts. Meanwhile, Lehman Brothers has predicted that US crude oil prices will average $73.50 per barrel next year.

In the metals markets on Monday, prices rose in both precious and base metals. Gold added 0.5 percent to $624.10 per troy ounce, while silver gained 1 percent to $12.88 per troy ounce and platinum was 5.1 percent higher to $1,246 per troy ounce. The price of platinum was helped by rumors that an exchange traded fund similar to those for gold and silver.

Among base metals, copper gained 0.6 percent to $6,840 per tonne even though London Metal Exchange inventories were up b y 2,050 tonnes on the day, helped by the announcement by Freeport-McMoran that it intends to purchase Phelps Dodge to create the largest publicly traded copper miner in the world. Elsewhere, nickel added 2.2 percent to $30,250 per tonne on a decline of 108 tonnes in LME stockpiles, while zinc was 3.6 percent higher to $4,169 per tonne as LME inventories dropped by 1,150 tonnes.

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