Oil, metals down

ANALYSTS have warned oil prices could fall below $US70 a barrel as reports on manufacturing, unemployment, home sales and construction from the US continued to disappoint.

"With global equities falling, the dollar holding strong and the future uncertain, oil could easily drop in price," investment group Sander Capital Advisors told the AP.

LaSalle Futures Group president of trading Matt Zeman told Dow Jones Newswires that Thursday's oil price rout was "a culmination of people realising that we're on the path to very slow, sluggish growth".

"More and more, once again you're hearing the term double-dip recession and that seems the way that we're headed."

Further pressure was placed on prices by the US Energy Information Administration's weekly report which showed another rise in fuel inventories in the week ended June 25, with gasoline stocks rising 537,000bbl to 281 million barrels, and distillate inventories rising 2.5MMbbl.

Singapore's Tapis crude closed at $US77.44/bbl last night, down from $81.70 on Wednesday.

Meanwhile, the same disappointing US economic data along with equally bleak Chinese news this week led to a big dive in copper prices.

On Monday, the London Metal Exchange cash official price closed at a neat $US6800 a tonne, but this morning it was around $6354/t - 6.6% lower.

But anything above $6000/t is still historically high with plenty of money to be made in PNG copper mining.

LME nickel is continuing its downward trend with the cash official price down 3.9% from Monday's close at $19,430/t this morning.

This price is still in safe ground but a steady march to below $15,000/t could be problematic for the higher cost nickel operations around the world.

Spot gold recently fell below the $US1200 an ounce level.

The commodity is volatile as it keeps breaking new ground during its long-term uptrend while there are plenty of doubters suggesting gold is in its own bubble.

The spot price was at $1198.7/oz this morning, down 3% from the close of Monday.


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