Commodities fall broadly on concerns about economy

AP News
Posted: Jun 23, 2011 4:52 PM
Commodities fall broadly on concerns about economy

Commodity prices dropped sharply Thursday on more evidence of a slowing global economy and a decision by a group representing 28 countries to release emergency oil supplies into the market in an effort to lower prices.

The declines came across the board. Oil fell 4.6 percent, silver dropped 4.7 percent, gold lost 2.1 percent and heating oil fell 5.8 percent.

There were indications of weaker economic growth in the U.S., China and Europe.

In the U.S., the number of people who applied for unemployment benefits last week rose unexpectedly, signaling weakness in the job market. That came a day after Fed Chairman Ben Bernanke said problems facing the economy may be worse than initially thought.

Meanwhile manufacturing grew more slowly in June in China and Europe, according to Purchasing Manager Indexes compiled by HSBC and Markit Economics.

Oil prices plunged after the International Energy Agency, which includes the U.S. and 27 other countries, said it would release 60 million barrels of oil from emergency stocks over a 30-day period to try to stave off higher energy prices that could strain the global economic recovery. Half the supply will come from the U.S.

"There are certainly concerns about economic growth moving forward," said Dave Meger, vice president of metals trading at Vision Financial Markets. "And, just as importantly, the idea that there is no hint of any type of stimulus to be ... provided by the Fed."

Benchmark crude for August delivery fell $4.39 to settle at 91.02 per barrel on the New York Mercantile Exchange.

In other Nymex contracts, heating oil fell 17.15 cents, or 5.8 percent, to settle at $2.7994 per gallon, gasoline dropped 15.24 cents to $2.7764 per gallon and natural gas fell 12.4 cents to $4.193 per 1,000 cubic feet.

August gold fell $32.90 to settle at $1,520.50 an ounce and September palladium dropped $27.30, or 3.5 percent, to $743.35 an ounce.

In July metals contracts, silver fell $1.737, or 4.8 percent, to settle at $35.002 an ounce, copper fell 4.9 cents to $4.039 per pound and platinum fell $57.90, or 3.3 percent, to $1,694.50 an ounce.

Grains and beans also dropped. September wheat fell 4 cents to settle at $6.6925 a bushel, December corn fell 4.25 cents to $6.46 a bushel and November soybeans fell 15.25 cents to $13.1725 a bushel.