Oil and Metals Prices Retreated Last Week

LONDON: Oil and metals prices retreated last week amid quiet trading owing to Asia's Lunar New Year holiday celebrations, while dealers also paused for breath ahead of a key G20 meeting.

A billion-plus Asians have enjoyed a week of festivities to mark the Year of the Snake, dampening demand for raw materials in China, the world's second biggest economy after the United States.

Meanwhile finance ministers from G20 states gathered Friday in Moscow for a meeting aimed at reassuring markets that the world's economic powers would not slug it out in "currency wars" to boost national growth.

The troubles of the debt-ridden eurozone weren't centre stage for the first time in several international meetings, with the main concern Japan's controversial plan for "monetary easing" that weakens the yen.

OIL

Brent crude retreated from nine-month highs above US$119 a barrel reached a week ago on healthy economic data in the United States and China - the world's two biggest energy consuming nations.

"Brent has been unable to achieve the nine-month high of a good US$119 per barrel it recorded a week earlier," said Commerzbank analyst Carsten Fritsch.

"The price has been stopped in its tracks by the International Energy Agency's unexpected downward revision of its demand forecast."

The IEA, representing oil consumers, trimmed its world oil demand forecast for 2013 on Wednesday.

It said the marginal cut of 85,000 barrels a day was in line with the prospect for a slowdown forecast by the International Monetary Fund, which last month cut its world growth estimate for 2013 to 3.5% from 3.6%.

On Tuesday, the Organization of Petroleum Exporting Countries (OPEC) raised its estimates for global oil demand this year, citing signs of a recovery in the global economy.

OPEC, which accounts for more than a third of global oil supplies, expects 89.68 million barrels of oil to be sold a day, up from 89.55 million estimated a month ago.

By Friday on London's Intercontinental Exchange, Brent North Sea crude for April stood at US$117.69 a barrel compared with US$118.96 for the March contract the previous week.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for delivery in March rose to US$96.77 a barrel from US$96.15 a week earlier.

PRECIOUS METALS

The price of gold hit a six-month low point at US$1,598.23 an ounce on Friday, while palladium struck US$777 an ounce, the highest level in 17 months, amid falling production in South Africa.

Gold "prices have encountered a fragile floor in the absence of demand from China," said Barclays analyst Suki Cooper.

Meanwhile global demand for gold fell last year in its first tumble since 2009 as demand in leading market India slid, narrowing the gap with second-biggest buyer China, the World Gold Council said Thursday.

Demand for the precious metal was 4,405.5 tonnes for the full year, down 3.85% from 4,582.3 tonnes a year earlier, the WGC report said.

But in value terms, gold demand in 2012 increased to a record high of US$236.4bil, as the average price for the precious metal rose.

A decline in consumer demand offset an increase in demand from institutional investors and central banks, the report said. For the full year, India's gold demand fell 12% from a year earlier - despite improved demand in the final quarter - to 864.2 tonnes.

By late Friday on the London Bullion Market, gold dropped to US$1,612.25 an ounce from US$1,668.25 a week earlier. Silver fell to US$30.18 an ounce from US$31.52. On the London Platinum and Palladium Market, platinum slid to US$1,676 an ounce from US$1,714. Palladium rose to US$754 an ounce from US$746.

BASE METALS

Base or industrial metals mostly fell.

"We are now in a situation where sentiment is less bearish and there is some optimism that (economic) recoveries in China and the US will lead to a stronger demand - but confidence is still not strong enough to suggest that a bull market lies ahead," said analysts at brokers Sucden Financial.

By late Friday on the London Metal Exchange, copper for delivery in three months fell to $8,218 a tonne from $8,279 a week earlier.

Three-month aluminium grew to US$2,154 a tonne from US$2,116. Three-month lead eased to US$2,404 a tonne from US$2,419. Three-month tin slid to US$24,850 a tonne from US$24,955. hree-month nickel retreated to US$18,220 a tonne from US$18,398. Three-month zinc dipped to US$2,168 a tonne from US$2,202.

COCOA

Cocoa futures hit fresh multi-month lows owing to an ample supply situation.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in March dropped to 1,425 a tonne from 1,455 a week earlier. On New York's NYBOT-ICE exchange, cocoa for May traded at $2,149 a tonne compared with $2,243 for the March contract a week earlier.