Crude falls below $90 in spite of attack plot
Javier Blas

Crude oil prices tumbled $9 during the week to their lowest level in a month.

Fears about lower US economic growth and talk of an increase in production by Opec at its meeting next week prompted massive selling.

After a rollercoaster week, traders said sentiment could be turning bearish. Even events such as a plot in Saudi Arabia to attack oil installations and an explosion in an important pipeline system between Canada and the US failed to support the level of oil prices.

"Market participants are concerned that a potential slowdown in the US and the global economy could dent demand for energy," said Sucden, the London commodities trading house.

Nymex January West Texas Intermediate crude on Friday dropped $1.70 to $89.33 a barrel, its lowest price since October 25, having reached a peak of $99.11 a barrel in the week. ICE January Brent fell $1.54 to $88.68 a barrel.

Analysts said the break below $90 a barrel meant the market's next line of support was closer to $80 a barrel, leaving prices vulnerable to waves of technical selling.

Opec will discuss whether to increase production at a ministerial meeting in Abu Dhabi on Wednesday.

The cartel has been considering an increase of 500,000 barrels a day to prevent record oil prices damaging the world's economy.

However, with prices falling sharply this week, sentiment among the cartel's oil ministers could turn round, traders said.

Ali Naimi, Saudi oil minister, said that supplies were "absolutely" ample. Asked if that meant that Opec would not increase its production, he said: "That remains to be seen."

The oil price fall and range-bound dollar-trading dragged down gold. Spot bullion in London Friday fell to $778.85 an ounce, down $45 on the week.

Base metals traded higher, with the exception of nickel, supported by a large drop in copper inventories in China but capped by concerns about the health of the US economy.

On the London Metal Exchange, copper rose 4.7 per cent on the week to $7,010 a tonne. Chinese copper inventories in Shanghai for the week fell by 10,417 tonnes, or about 23 per cent, to 34,438 tonnes, leaving enough for three days of domestic use.

Nickel fell 7.2 per cent on the week to $26,900 a tonne, its lowest level since early September.

Aluminium rose 0.2 per cent to $2,511 a tonne while tin moved above $17,000 a tonne, up 2.3 per cent on the week.

Agricultural commodities ended mixed, with CBOT January soyabeans slightly lower after touching a 34-year high of $11.14 a bushel this week.

Copyright The Financial Times Limited 2007