Commodities Daily Alert

5 September  2008 

Oil Prices Soften Further.

• Continuing worries about the international economic outlook, a firmer USD, and, possibly, market speculation that OPEC may not move production levels following next week's OPEC meeting, left oil prices softer.  NYMEX light sweet crude (October contract) was under USD108/barrel at the time of writing.  US Gulf oil production remains disrupted in the aftermath of Hurricane Gustav.  The US Minerals Management Service reported yesterday that over 95% of oil production in the US Gulf was still shut-in.  The US Energy Information Administration's Weekly Petroleum Status Report showed that US crude oil inventories fell by 1.9 million barrels in the week ended 29 August. US motor gasoline inventories and distillate inventories were also lower in the last week.  US oil demand also remains subdued, with total petroleum products supplied in the four weeks to 29 August around 3.5% below the level of a year earlier.
• LME base metals prices finished mixed last night, although concerns about the international economic outlook and the firmer USD were negative influences. Lead pices slipped 2.7%, despite a decline in LME lead stocks.  Copper and nickel prices were also lower. LME copper stocks increased further.  The combination of a firmer USD and softer oil prices left the gold price lower.

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