Sell-offs send crude oil prices lower

| October 30, 2006 | 0 Comments

Crude oil prices were down sharply on Monday as investment funds got rid of their exposure to the sector ahead of Organization of Petroleum Exporting Countries production cuts, due to go into effect on November 1. More than 52,000 contracts were sold, according to the Commodity Futures Tradning commission, as speculators divested themselves of long positions, which bet that prices will go higher, indicating that they do not believe the OPEC cuts will have any real effect on prices.

Brent crude December contracts were $2.03 lower to $59.05 per barrel by late afternoon in London, while West Texas Intermediate crude for December delivery fell $1.97 to $58.78 on the New York Mercantile Exchange by early afternoon.

In the metals market, gold added $8 by late in the day in London, to $606.20/$607.20 per troy ounce after hitting $610 per troy ounce earlier. Among base metals, zinc managed a new record high, trading at $4,190 per tonne on the London Metal Exchange after inventories in LME warehouses dropped 1,850 tonnes during the day to 108,950 tonnes, about four day’s global consumption. At the end of last year, inventories stood at 400,000 tonnes. Aluminium reached its highest price in five months when it climbed to $2,834 per tonne, while lead traded around its record high of $1,600 per tonne. Copper, meanwhile, fell $100 to $7,372 per tonne.

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