LONDON - Oil fell below $69 a barrel today, close to a five-week low, as renewed concern about rising inflation and slower economic growth prompted selling across commodity markets.
The drop in crude oil came alongside a slide in prices of industrial and precious metals, which had hit record or
near-record highs in the past month. Copper tumbled more than 6 per cent and aluminum, zinc and gold also fell.
"Oil is moving in sympathy with other commodities," said Alexander Kervinio, analyst at SG CIB Commodities in Paris. "People are still worried about inflation, and we don't have anything new to push oil higher."
US crude settled 92 cents lower at $68.53 a barrel -- down 4.9 per cent from a week ago -- after hitting $67.85 yesterday, the lowest level since April 10. London Brent crude settled 99 cents lower at $68.68 a barrel.
Oil's drop this week coincided with a sell-off in commodities, stocks and bond markets. But analysts say worries about supply cuts in Nigeria and possible disruption of oil flows from Iran limit selling.
"The medium-term picture still looks pretty bullish to us. The mid-60s is about as low as it will go," Kevin Norrish, an analyst at Barclays Capital, said of the price of oil.
Mohammed Barkindo, acting secretary-general of the Organisation of Petroleum Exporting Countries, said yesterday oil prices would not fall until global political tensions eased.
"Prices will not fall until this anxiety abates," he said in Oslo, where officials of Opec and the International Energy Agency, an advisor to 26 industrial nations, were meeting today.
Opec is pumping close to full tilt, and analysts say the cartel is unlikely to change its formal supply limit when ministers next meet in Caracas on June 1.
Also speaking in Oslo, Iran's Opec governor, Hossein Kazempour Ardebili, said fundamentals suggested the group should cut output by up to 1.2 million barrels per day, but it would probably decide in June to keep production unchanged.
"There is no demand unmet and no call on Opec oil beyond its capacity," he said.
Opec has been pumping more or less flat out for more than a year, though militant attacks in Opec producer Nigeria have cut back production there by around a quarter.
Together with fears output from Iran could be disrupted as a result of its dispute with the West over its nuclear ambitions, the Nigerian production loss helped to push prices to a record of $75.35 for US crude in April.
Iranian President Mahmoud Ahmadinejad yesterday derided foes of Iran's nuclear work as mentally disturbed, ignoring a fresh plea by UN Secretary-General Kofi Annan for all sides in the dispute to calm their rhetoric.
Tehran insists its nuclear programme is peaceful, but Western countries fear it could be developing atomic bombs.
Royal Dutch Shell expects to return to its abandoned Nigerian oil fields "within weeks or months," the company's chief financial officer, Peter Voser, told Reuters.
Shell has lost production of 455,000 bpd in Nigeria. Voser did not specify when output would resume, saying the company needed to assess any damage and carry out repairs.
"We would expect production to come back sooner rather than later," he said.
- REUTERS
LONDON - Oil fell below $69 a barrel today, close to a five-week low, as renewed concern about rising inflation and slower economic growth prompted selling across commodity markets.
The drop in crude oil came alongside a slide in prices of industrial and precious metals, which had hit record or
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