Commodity prices suffered a dramatic slump yesterday as oil fell below the psychologically important $100 a barrel mark in the US last night.
The accelerating crash brought into sharp focus a commodity sell-off that has now spanned four days and has seen silver lose almost a quarter of its value. Investors scrabbled for other safe-haven assets during the biggest exodus from the sector for two years, amid speculation the commodities boom has come to an abrupt end.
US crude plummeted 8.64 per cent to $99.80 a barrel, the biggest one-day fall in oil prices since the height of the financial crisis. Brent crude lost 9.78 per cent, hitting $109.02 last night, after climbing to $126 last week.
The slump followed a report showing productivity growth in the US slowed in the first-quarter, while jobless claims jumped to an eight-month high. Traders are also worried about excessive monetary tightening in China, the world’s top consumer of raw materials.
US households have been squeezed by petrol prices approaching $4 a gallon, leading to higher than expected oil inventories of 3.4m barrels as people shied away from long car trips over the Easter break.
In a roll-call of despair for commodity holders, silver fell 10 per cent to $35.34, tin dropped more than seven per cent, nickel by over six per cent and copper by a shade above three per cent. Even safe-haven gold fell two per cent yesterday.
Soft commodities fared little better, with coffee declining 3.3 per cent, sugar down 2.5 per cent and cotton falling by 4.6 per cent. Gas also fell, losing 5.7 per cent.
US Treasury bills were among the big winners, with yields falling 3.16 per cent.
The Dow and the S&P 500 both fell more than one per cent as energy shares slumped with the oil price. The euro was down two per cent against the greenback
The sell-off came a day after commodities giant Glencore priced its £36bn flotation at the bottom of its range. Analysts say the float could serve as a marker for the high point of the commodity boom.
Last month long-term bull Goldman Sachs advised clients to close their long positions on a basket of commodities including copper, platinum, soy beans and crude oil.
LME tin down 9.8%
Palladium down 10.4%
Gold down 4.5%
Silver down 23.3%
Brent crude down 9.1%
US crude down 9.5%