Commodities fall for second day

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Australian broker Jonathan Barratt says the price of oil still has a “lot more weakness”

Commodity prices have fallen for a second day in early trading in Europe, led by another drop in crude oil.

It comes after markets were hit by one of the biggest sell-offs in two years on Thursday.

Brent crude fell 5.8% to $105.15 a barrel, adding to an 8.6% drop on Thursday, and bringing its cumulative fall over the past week to almost 17%.

Industrial metals such as copper also saw further falls, as did cotton and some foodstuffs.

Copper futures were down a further 1.75%, following a 6% slide the day before.

Meanwhile, the price of US sweet, light crude oil fell a further 2.9% on Friday morning to $95.73 a barrel.

However, precious metal prices – such as gold and silver – held steady, despite having previously followed other commodities sharply lower during Thursday’s market rout.

Rebound short-lived

Earlier in the day, during Asian trading hours, commodity prices had recovered some of the ground lost on Thursday as buyers were attracted by the cheaper prices.

Victor Shum of Purvin and Gert energy consultants said oil markets were clawing back some of their losses, as Asian traders capitalised on cheap crude prices and bought back into the market.

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“Prices are up but this is not unusual after a massive sell-off, we are observing some market participants considering this as a buying opportunity,” he said.

But with the open of trading in Europe, these gains were quickly wiped out as the market pushed lower.

Analysts warn the volatility in the markets could remain.

“When you have this kind of damage, it will take several weeks, or maybe several months… for confidence to be rebuilt,” said Dennis Gartman, author of a markets guide.

“It’s not the end of the commodities cycle, not even close. You still have to call this a correction. It’s a sizable one and scared the heck out of everybody.”

Asian stock markets slid in reaction to Thursday’s commodity price falls, while European markets fell moderately in early trading.

The Nikkei 225 index ended the day 1.5% lower, while Hong Kong’s Hang Seng index slid 0.5%.