https://arab.news/g45bj
SINGAPORE/LONDON: Commodities including oil, natural gas, metals and agricultural products joined a global sell-off in equities on Monday as fears of a US recession stoked worries over demand, though losses varied widely.
Commodities had already taken a hit in recent weeks, weighed down by a sluggish economy in top buyer China, with crude oil down around 5 percent last week, copper hitting a four-month low on the London Metal Exchange, and corn near its weakest since 2020.
“Commodities have seen selling pressure throughout the last month, basically meaning the momentum crash currently hitting stocks has to a certain degree already occurred,” Saxo Bank analyst Ole Hansen said.
Crude oil dropped around 1-1.5 percent on Monday in volatile trade, less than losses on major equity indexes as US recession fears and possible implications for oil demand were somewhat mitigated by price support from rising tensions in the Middle East.
“Geopolitics, for example anxiety about Middle East supply disruption, and the growing belief that OPEC will not unwind voluntary (output) cuts, provides relative support for oil as opposed to equities,” PVM analyst Tamas Varga told Reuters.
Copper prices tumbled over 3 percent to 4-1/2 month lows as a deteriorating demand outlook in China and the US, the world’s two largest economies, triggered a sell-off of the metal used in power and construction.
European gas, power and carbon contracts also fell. European benchmark gas for the month ahead sank more than 5 percent in early trade to 35.17 euros/megawatt hour.
Gas has been under pressure from higher Norwegian supply and seasonally high temperatures, but panic selling in line with the wider sell-off was also a factor, according to one trader.
EU carbon permit prices for delivery in December were down around 3.5 percent on “fears that an economic downturn will limit activity,” according to Henry Lush, EU carbon analyst at consultancy Veyt.
Most agricultural markets suffered too, with wheat down 3-3.5 percent, corn down 1.5 percent, soybeans down 1 percent and sugar at a near two-year low.