COMMODITIES-Investors flee oil, metals and soy on demand fears

Tag : metals products
United States - * Oil near 3-month low on OPEC supplies
* Gold at six-week trough, platinum tumbles on demand fears
* Copper bounces but sentiment weak, soybeans at 3-month low
By Lewa Pardomuan
SINGAPORE, Aug 5 (Reuters) - Investors fled commodities on Tuesdayas fears of a global economic slowdown, widely blamed onrecord-high oil prices, threatened to slash demand for productsfrom industrial metals to rubber and soybeans. Oil held near athree-month low, having lost more than 18 percent in value sincehitting an all-time high above $147 a barrel in mid-July asconcerns over tight supplies subsided. Weaker oil dragged downgold, while high inventories put pressure on copper.
"Slower international economic growth has raised some worries aboutdemand for individual commodities," said David Moore, an analyst atCommonwealth Bank of Australia in Sydney.
"With oil prices having retreated and the U.S. dollar havingpartially recovered, investment interest in gold seems to havewaned somewhat and gold prices adjusted lower at a result," hesaid.
Oil fell $1.11 to $120.30 a barrel, hit by evidence of rising OPECoutput and falling demand in the United States, the world's largestconsumer of oil, which is already battered by a housing and creditcrisis.
Gold tumbled to its lowest level in nearly six weeks around $890 anounce, losing some of its appeal as a hedge against inflation asoil dropped. Gold is well below a lifetime high of $1,030.80 struckin March.
Commodity prices have taken a dramatic turn since hitting recordhighs, on profit taking and a slowing U.S. economy with itsperceived impact on global demand for commodities.
The Reuters-Jefferies CRB, an index of 19 futures markets, fell toa three-month low on Monday, extending its weakness from July --its worst month in 28 years.
In industrial metals, London Metal Exchange three-month copper rose$30 to $7,640 a tonne on bargain hunting after dropping almost 4percent to a low of $7,601 on Monday, its weakest since earlyFebruary.
But rising stocks and a soft technical picture, along with aretreat in oil and other commodities were likely to keep basemetals under pressure as institutional investors liquidated longpositions, said dealers.
"With prices having moved through the supportive $7,800 level,targets are now in view at $7,600 initially," London-basedbrokerage Triland said in a note. "Any attempt to retracelosses...will need to secure a close back above resistance at$7,800."
A tumbling oil price and concerns about falling tyre demand sentthe most active rubber contract on the Tokyo Commodity Exchange toits weakest in two months at 314.6 yen per kg.
Platinum also suffered, falling to a six-month low of $1,530 anounce on worries about a slowdown in the car industry after U.S.car sales slipped to a 16-year low in July, led by a 27 percentdrop at General Motors Corp. (nyse: GM - news - people )
Automobile manufacturers use platinum to help scrubenvironmentally-damaging substances from car exhaust fumes.Autocatalysts account for more than 60 percent of global demand.Platinum is below an all-time highof $2,290 hit in March.
Reflecting the sell-off in commodities, U.S. soybean futures fellnearly2 percent to their lowest level in three months on goodcropweather and declining Chinese demand.
The most-active November soybean contract on the Chicago Board ofTrade fell 1.83 percent to $12.71-A¼ per bushel. Septembercorn dipped 12 cents to $5.23-A½ -- the lowest level for thefront month in more than four months.
"Soybeans and corn will continue the downward trend," said KazuhikoSaito, strategist at Interes Capital Management Co. in Tokyo. "Weare looking at the September corn contract below $5 and Novembersoybeans below $12 in the next one or two weeks."
Malaysian palm oil futures hit nine-months low on weak crude oilprices. (Additional reporting by Seng Li Peng, Nick Trevethan,Naveen Thukral in Singapore and Risa Maeda in Tokyo; Editing byMichael Urquhart) Copyright 2008 Reuters, Click for Restriction
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