London: Crude oil prices hit multi-year lows this week after OPEC held output levels despite global oversupply, in a move perceived by some analysts as an attack on booming US shale energy.
Heavy falls in the oil market also dragged down many other commodities, despite holiday-shortened trade due to Thanksgiving on Thursday in the United States.
"With crude oil plunging, commodities generally have come under pressure with general portfolio liquidation being cited as a factor behind the move," said Standard Bank analyst Leon West gate.
"Other knock-on effects in terms of energy costs and lower production costs have also emerged."OIL: The 12-nation Organisation of Petroleum Exporting Countries (OPEC) opted Thursday to keep its collective production ceiling at 30 million barrels per day, where it has stood for three years.
The no-change decision sent London Brent oil collapsing on Friday, sinking below $70 for the first time in four and a half years, to $69.78 a barrel.
Brent later settled at $70.15 a barrel, down $2.43 from Thursday`s close.
In New York, Texas crude closed at $66.15 a barrel, plunging $7.54 to its lowest close since September 2009.
The oil market has shed more than a third of its value since mid-June, depressed by plentiful supplies, the stronger dollar and demand fears in a faltering global economy.
OPEC kingpin Saudi Arabia and other monarchies of the Gulf were opposed to any production cuts, seeking instead to counter the rise of US shale oil -- which is more expensive to produce, according to analysts, and which is eating into OPEC`s market share.
"OPEC is dominated by Saudi Arabia and Kuwait, who also have the highest tolerance for low oil prices due to the economies of scale generated by their huge super fields," said analyst Nick Campbell at British-based consultancy Inspired Energy.
"Therefore, in order to combat low demand and a new supply threat -- both mainly in the United States -- the trick is to drop your price."
Technological innovations have unlocked shale resources in North America and raised daily US oil output by more than 40 percent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil.
"US shale producers costs are estimated to be much higher than most OPEC producers and, therefore, by pushing the oil price lower they are hoping to drive the higher cost current producing wells to the margin and, more importantly, stop new sites developing," added Campbell.
Poorer cartel members, including Venezuela and Ecuador, had called unsuccessfully for OPEC to trim production as tumbling prices were slashing their revenues.
"OPEC is showing that it has become powerless versus the North American supply push," added Petro Matrix analyst Olivier Jakob.
"Saudi Arabia knows that in a low price environment it will be the last one standing."
US oil output is surging thanks to shale energy, which involves blasting a high-pressure blend of water, sand and chemicals deep underground in order to release hydrocarbons trapped between layers of rock.
By Friday on London`s Intercontinental Exchange, Brent North Sea crude for delivery in January sank to $73.05 a barrel compared with $79.56 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for January dived to $69.13 a barrel from $75.80 a week earlier.
BASE METALS: Base or industrial metal prices fell across the board, as the sector failed to shrug off the impact of tumbling crude oil prices.
"The slump in oil prices has not left the base metals unscathed," said Commerzbank analysts in a research note to clients.
"Copper for example has dropped below the $6,500-per-tonne mark... to hit an eight-month low.
"Alongside this external factor, news from Peru is doubtless also weighing on the price. According to union statements, workers there will on Monday be ending a strike that has been underway for three weeks now at the Antamina copper-zinc mine after it was declared illegal by the labour ministry."
Base metals shed some of their gains won the previous week, when a surprise interest rate cut in China sparked hopes of soaring demand in the key Asian powerhouse nation.
By Friday on the London Metal Exchange, copper for delivery in three months dropped to $6,427.50 a tonne from $6,739.75 a week earlier.
Three-month aluminium declined to $2,025 a tonne from $2,061.25.
Three-month lead reversed to $2,030 a tonne from $2,063.
Three-month tin fell back to $20,140 a tonne from $20,295.
Three-month nickel dipped to $16,240 a tonne from $16,463.
Three-month zinc decreased to $2,221.25 a tonne from $2,302.PRECIOUS METALS: Gold lost its shine, falling as traders nervously eyed this weekend`s Swiss "gold referendum".
As Switzerland prepares to vote on whether to force the country`s central bank to increase its gold reserves, economists warn a `Yes` vote could wreak havoc in financial markets.
The initiative "Save Switzerland`s gold", which will be put to a popular referendum vote on Sunday, would oblige the Swiss National Bank (SNB) to boost its gold reserves to at least 20 percent of its holdings, nearly three times more than the current level of seven percent.
It would also require the bank to stop selling its gold and repatriate reserves held in Canada and Britain to ensure that all of its holdings of the precious metal are stored within Switzerland.
"Gold prices have continued their retreat from $1,200, although the $1,180 level is providing support for the price for the time being," said IG analyst Chris Beauchamp.
"The Swiss gold referendum on Sunday is expected to see a defeat of the motion, which should create further selling pressure as the new week dawns."
Industry organisations have also warned that the move would tie the central bank`s hands and damage its credibility.
Financial markets are wary of the consequences if the initiative passes in a country that already counts the world`s highest gold reserves per inhabitant.
By late Friday on the London Bullion Market, the price of gold recoiled to $1,182.75 an ounce from $1,203.75 a week earlier.
Silver slipped to $15.97 an ounce from $16.30.
On the London Platinum and Palladium Market, platinum stood at $1,205 an ounce against $1,230.
Palladium however increased to $809 an ounce from $794.COCOA: Prices held firm as Ebola-linked supply worries continued to fade in key producing nations Ghana and Ivory Coast.
"The risk premium associated with the spread of Ebola in West Africa, which in late September had driven cocoa prices to their highest level since spring 2011, has largely disappeared from cocoa prices," noted Commerzbank analysts.
By Friday on LIFFE, London`s futures exchange, cocoa for delivery in March rose to £1,901 a tonne from £1,869 a week earlier.
On the ICE Futures US exchange, cocoa for March increased to $2,862 a tonne from $2,821 a week earlier.
SUGAR: Prices drifted lower in muted trading conditions.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in March reversed to $413.80 from $417.50 a week earlier.
On ICE Futures US, the price of unrefined sugar for March eased to 15.91 US cents a pound from 15.96 US cents a week earlier.
COFFEE: The coffee market pushed higher.
By Friday on ICE Futures US, Arabica for delivery in March rose to 192.80 US cents a pound compared with 188.85 cents one week earlier.
On LIFFE, Robusta for January gained to $2,094 a tonne from $2,070 a week earlier.
RUBBER: Kuala Lumpur rubber prices inched lower on the back of sparse demand.
The Malaysian Rubber Board`s benchmark SMR20 declined to 151.30 US cents a kilo from 153.30 US cents the previous week.
