Oil prices steadied on Monday while gold briefly recovered the $800 level after sinking to its lowest level for almost nine months on Friday, writes Chris Flood, Financial Times, August 18 2008 at http://www.ft.com.
Forwarded by Budhi Mulyawan 180808. 

Nymex September West Texas Intermediate rose 53 cents to $114.30 a barrel while ICE October Brent added 50 cents at $113.05 a barrel, supported by the threat of disruptions to oil and gas production in the Gulf of Mexico from tropical storm Fay.

Hedge funds raised their bets on further weakness for oil prices last week. The latest data from the Commodity Futures Trading Commission showed the speculative net short position rose 64.5 per cent to 9,130 lots in the week ending August 12 when WTI hit $113.01.

Traders wonder if crude oil could fall to $100 a barrel before the next Opec meeting in September and what steps the cartel would then take to stop oil prices falling further.

“The danger for those looking forward to more reasonable oil prices is that Opec, haunted by the price crash of 1998, over-reacts and cuts its production too sharply” said analysts at the Centre for Global Energy Studies.

The CGES warned that the cartel was being over-optimistic in its forecast for non-Opec output to rise 1.2m barrels a day between the third and fourth quarters of this year.

“The much-needed downward correction in oil prices could prove short-lived, if Opec over-reacts and cuts its output too sharply,” said the CGES.

Gold briefly rebounded above the $800 level, rising to a high of $803.65 a troy ounce before easing back to $798 from New York’s late quote of 787.65 on Friday.

On Friday, gold sank to a low of $773.90 a troy ounce, its lowest level since mid-November, under pressure from a recovery in the dollar, reduced concerns about inflation and a slowdown by producers in buying back gold hedges.

Platinum rose to $1,377 a troy ounce from New York’s late quote of $1,365 on Friday while palladium was slightly firmer at $287 a troy ounce from $281.

The latest CFTC data showed the speculative net long position for gold,silver, platinum and palladium all fell in the week ending August 12 as speculators cut back on their bets for price gains across the precious metals complex.

Base metals steadied on Monday, helped by gains in Shanghai and a softer tone for the US dollar.

Copper traded at $7,410 a tonne from $7,360 on Friday while aluminium was marginally firmer at $2,790 a tonne from $2,780 on Friday.

China has announced a new 15 per cent tax on exports of aluminium alloy which will take effect August 20, aimed at curbing over-production of aluminium by energy-intensive smelters. China’s exports of unwrought aluminium alloy are expected to fall from September onwards as a result of the new tax. Demand for primary aluminium is expected to rise in Asia as alloy exports from China decline.

Copyright The Financial Times Limited 2008 

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