Commodity selloff: Oil prices drop nearly 3%

NEW YORK: Brent oil pared losses after plunging $3 to hover near $100 a barrel, extending a two-week selloff that has knocked nearly 10 percent off prices as part of a wider flight by investors from commodities.
Gold racked up the biggest two-day loss in 30 years while Brent crude fell for the eighth time in 10 sessions, in what analysts said were indications that a host of weak fundamental signals dominated sentiment.
In the United States, crude oil stockpiles have ballooned to 30-year highs as domestic output surges, with no end in sight. Global demand has struggled due to economic uncertainty in top consuming nations.
Against the background of looser fundamentals, lower-than-expected GDP growth from No. 2 oil consumer China rattled the commodity complex further, and nearly pushed Brent below $100 a barrel for the first time since July 2012.
“The selloff is long overdue and is a reflection of weakness in the market that everyone had been perceiving,” said Edward Morse, global head of commodities research at Citigroup.
He said inventory builds in the US would likely continue into the third quarter and that Chinese fuel demand was weaker than expected.
“I struggle to find where the demand surprise could be.”
Punctuating the bearish mood, Goldman Sachs, one of the most influential banks in commodity markets, recommended clients close their bets on higher prices for global benchmark Brent crude, warning prices could continue to fall.
Front-month May Brent LCOc1, which expired on Monday, traded as low as $100.02 a barrel in early US activity, before settling down $2.72 at $100.39 a barrel.
Over the past 10 sessions, prices have dropped 9.7 percent, sending the contract to just over 26 on the 14-day Relative Strength Index. Commodities are generally considered oversold if they dip below 30 on that index.
The more actively traded June contract gave up $2.41 to settle at $100.63 a barrel.
US crude CLc1 settled down $2.58 at $88.71 a barrel, hitting the lowest level since mid-December.
US crude lost 2.8 percent in a day of heavy trading, with volumes 47 percent above the 30-day moving average. Brent May crude lost 2.6 percent in normal volume.
US gasoline futures RBc1 gave up 1.7 percent to trade at $2.75 per gallon, hitting the lowest level for this time of year since 2010.
Heading into the summer driving season, US stockpiles of the fuel are nearly 4.9 million barrels over the five-year average, while demand is at the lowest seasonal level since 2003, according to US government data.
Monday’s selling was kick-started by data showing China’s economic growth unexpectedly slowed in the first three months of 2013, falling to 7.7 percent from 7.9 percent in the final quarter of last year. Economists had forecast 8 percent growth.
The news compounded Friday’s weak US retail sales data and forecasts for lower global oil demand growth for 2013 released last week by the International Energy Agency, the US Energy Information Administration and the Organization of the Petroleum Exporting Countries.
As gold breached key support at $1,400 per ounce and copper hit 1-1/2-year lows, the Thomson Reuters-Jefferies CRB index that tracks 19 commodity markets dropped to the lowest level since late June.
Tensions mounted on Monday over a contested presidential election in Venezuela, with opposition contender Henrique Capriles urging his followers to protest Nicolas Maduro’s declared victory.
US equity markets fell for a second straight session, with major indices down more than 1 percent.