Oil prices slid on Friday after the collapse the US automakers bailout plan increased worries about the stability of the US and global economies.
This week’s OPEC meeting was supplanted as a factor, but will re-emerge when the details of the new version of the bailout plan are released.
Nymex January New York crude futures slipped $US1.70 a barrel to close at $US46.28, while in London Brent North Sea crude for January ended down 98 cents at $US46.41 a barrel.
Oil prices had soared more than 10% on Thursday on signs that OPEC and Russia would cooperate next week in cutting production to support sagging prices.
An index of six metals traded on the London Metal Exchange was up 4.1% and despite Friday’s weakness, oil rose 13%.
That was after oil and many metals had hit multi-year lows the week before.
If the car bailout package is done, then the developing commodities rally will resume, especially if OPEC can convince the market that it is serious and will stick to its output cuts.
Oil climbed more than $US3 from the day’s lows on Friday as the Bush administration indicated its willingness to give short-term help to General Motors and Chrysler.
Goldman Sachs cut its average oil price forecast for next year and said crude may drop to $US30 a barrel in the first quarter.
Goldman Sachs cut its price forecast for 2009 to $US45 a barrel from $US80 as the first simultaneous recession in America, Europe and Japan since World War II has cut oil prices in half this year. This will be the first down year in the past six for oil prices.
Copper fell in London and the US, leading all metals lower on the US auto bailout news and concerns demand for commodities in China and the US will weaken further in the New Year.
That was after a strong rise on Thursday.
New York copper fell 8.35 USc, or 5.5% to $US142.85 USc on Friday, before the Bush administration changed its mind on the car industry bailout package being financed from the $US700 billion bailout fund.
In London, three months copper fell $US140, or 4.2%, to $US3,180 a tonne, taking the gain in the week to 4.3%. LME aluminum fell $US44, or 2.8% on Friday, but was up 1.9% over the week.
New York copper rose 4%, or 5.50 USc last week. Without Friday’s fall, it would have been up more than 9%.
Goldman Sachs said last week that it saw demand for copper in 2009 falling 3.5% and aluminium by 1.7%. Goldman Sachs analysts said copper and aluminium miners and smelters need to cut production even more to counter the demand collapse.
“We expect substantial surpluses across most metals to continue to pressure prices lower from current levels,” the report said. “Fundamentals are strongest for zinc and weakest for aluminum, where inventories are set to climb to extraordinary levels.”
Aluminum stockpiles monitored by the LME rose 15,725 tonnes to 1.92 million tonnes on Friday, the highest since November 1994.
Copper stockpiles added 3,975 tonnes to 306,825 tonnes, the highest since February 2004.
Among other LME-traded metals, nickel slipped $US344 to $US10,776 a tonne, lead lost $US10 to $US1,010 a tonne and zinc fell $US46.50 to $US1,059.50 a tonne. Tin slid a sharp 5.4% to $US11,450 a tonne.
