Crude Oil Falls After OPEC Delays Decision to Reduce Production

Dec. 1 (Bloomberg) -- Crude oil fell in New York after the Organization of Petroleum Exporting Countries deferred for another two weeks a decision to reduce output.

Slowing global growth means demand will be “much lower” than expected a month ago, OPEC said in a statement after the group’s Nov. 29 meeting in Cairo. Another reduction on Dec. 17 may not be needed if member states enacted 80 percent of the 1.5 million barrel-a-day reduction agreed in October, Al Hayat reported, citing Saudi Arabia’s Oil Minister Ali al-Naimi.

“We’ve got a market that’s focused a little bit too much on the demand-side factors and perhaps less on supply,” Gerard Burg, energy and minerals economist at National Australia Bank Ltd. in Melbourne, said in a Bloomberg television interview. The impact of future cuts “will be muted by the fact that spare capacity has been on the increase,” he said.

Crude oil for January delivery fell as much as $1.33, or 2.4 percent, to $53.10 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $53.19 at 8:30 a.m. in Singapore.

The contract fell 1 cent on Nov. 28, when trading was shortened because of the Thanksgiving holiday the day before. Prices leapt 7.2 percent on Nov. 26 after China, the world’s fourth-largest economy, slashed interest rates to sustain growth and the European Union proposed $259 billion of measures to limit the impact of the global financial crisis.

OPEC Output

OPEC pumps about 40 percent of the world’s oil. Slowing demand means the global market is over-supplied by more than 2 million barrels a day, Iranian Oil Minister Gholamhossein Nozari said yesterday.

Prices around $75 a barrel would be “fair” and would support investment in new fields, al-Naimi said at the weekend.

Brent crude oil for January settlement fell 49 cents, or 0.9 percent, to $53 a barrel on London’s ICE Futures Europe exchange today. It rose 0.7 percent to $53.49 on Nov. 28.

New York oil futures have tumbled 64 percent from their July 11 record of $147.27 a barrel as the U.S., Europe and Japan headed for their first simultaneous recession since World War II.

Prices gained 9 percent last week, having reached $48.25 on Nov. 21, the lowest since May, 2005, as U.S. equity prices plunged and U.S. oil stockpiles rose for an eighth week.

“The oil market is really struggling for direction,” National Australia’s Burg said. “The prospect of cuts in future might tend to stabilize the crude market for the short-term” and prices have established “something of a floor” at $50, he said.

U.S. Economy

A report today in the U.S., the world’s largest oil consumer, will probably show manufacturing contracted for a fourth straight month in November, according to a survey of economists. The forecast decline will take the Institute for Supply Management’s factory index to the lowest in 28 years.

U.S. crude oil inventories jumped 2.3 percent to 320.8 million barrels in the week ended Nov. 21, the most in six months, according to Energy Department data. Global stockpiles are equivalent to about 56 days of demand, when 52 days would be usual this time of year, OPEC Secretary General Abdalla el-Badri said Nov. 27.

Weak near-term oil prices have made it viable for companies to hire supertankers to store the commodity for later use, Frontline Ltd. Chief Executive Officer Jens Martin Jensen said Nov. 28. The company has leased two tankers for storage and is in talks for a third, he said.

Gold Has Biggest Monthly Gain in Nine Years on Demand for Haven

Nov. 28 (Bloomberg) -- Gold prices rose in New York, capping the biggest monthly increase in nine years, on demand for a haven following terrorist attacks in India. Platinum had the biggest weekly gain since May.

At least 124 people were killed and 370 were injured in almost 48 hours of violence as terrorists moved through Mumbai, India’s financial hub. Elements in Pakistan are responsible for the attacks, the Press Trust of Indian cited External Affairs Minister Pranab Mukherjee as saying.

“The devastating attacks in India have added a new dimension to global jitters,” Jon Nadler, a senior analyst at Kitco Inc. in Montreal, said in a report.

Gold futures for February delivery rose $7.70, or 0.9 percent, to $819 an ounce on the Comex division of the New York Mercantile Exchange. This month, the price rose 14 percent, the most since September 1999. In the week, the metal climbed 3.4 percent. Futures still are down 2.3 percent in 2008.

Platinum futures for January delivery climbed $12.60, or 1.4 percent, to $882.30 an ounce on the Nymex. This week, the metal rose 6.9 percent. The November gain of 6.1 percent snapped a four-month slide. The price still is down 42 percent this year.

Pakistan’s President Asif Ali Zardari said “non-state actors” were forcing their agenda on India and Pakistan and that the two governments must not allow them to succeed.

Gold’s gains were limited as the dollar climbed against the euro, limiting demand for the precious metal as an alternative investment. The euro dropped as much as 2 percent against the greenback.

‘Dollar May Strengthen’

“It doesn’t make much sense for some investors to buy gold at a time when the dollar may strengthen further,” said Sergey Grudev, an analyst at Standard Bank Russia in Moscow.

The dollar may rise to $1.25 per euro in the next two months and $1.20 per euro by the end of the first quarter, he said.

Gold reached a record $1,033.90 on March 17 as the euro headed for a record against the dollar.

Silver futures for March delivery fell 3.9 cents, or 0.4 percent, to $10.23 an ounce. The metal rose 5.1 percent in November, ending a three-month slide. The price was up 7.6 percent in the week, the most since late September. Futures are down 31 percent this year.

Palladium futures for March delivery gained $2.60, or 1.4 percent, to $194.25 an ounce. The price still gained 7.8 percent this week. In November, the metal still dropped 2.7 percent, extending the slide to five months. Futures have tumbled 49 percent this year.

FCPO Commentary on 01/12/08

FCPO February futures contract retrace RM28 lower compare to previous trading session and close at RM1632 with a total 6365 lots traded in the market. CPO price plunge from RM1685 region before closing due heaving profit taking activities after 4 days surge up consecutively.



Technically, CPO price plunge from RM1689 region after encounter great selling pressure at RM1700 region; 23.6% Fibonacci projection figures. However, we would recommend traders to continue to hold long position around the support region at RM1620 andRM1540 in the coming trading session provided CPO price seems temporary holding against the selling pressure. We expect CPO price would continue to surge up towards RM1770 in the coming trading session provided support regions were not violated.

FKLI Commentary on 01/12/08

FKLI November contract fall 6.5 points lower compare to previous trading session to close at 866.5 with a total of 4925 lots traded in the market. FKLI closed lower during trading session due to profit taking activities.

Technically, FKLI forms a Doji formation in the weekly chart with significant volume traded during the week. However, FKLI was expected encounter great resistances around 877 and 891 region. We expect FKLI would be traded higher provided if support levels at 850 and 842.5 were not violated. Traders were advice to hold long position in the coming trading session once the resistance levels were violated.