Date: Wednesday 30 Jun 2010
Concerns about slowing economic growth in China sapped demand for oil.Traders reacted to a report from US based research group the Conference Board which showed that its China leading economic index rose just 0.3% in April, a sharp revision down from its preliminary estimate of a 1.7% rise.
That news had oil and mining stocks on the back foot and had traders selling off oil and diving for the cover of safe investments such as gold and US Treasuries.
The August contract for crude fell $2.31 to $75.94 a barrel in New York, the biggest single day decline since 4 June.
The fall may have been greater had not fears about the potential havoc that tropical storm Alex could wreak helped prop up the oil price.
Current expectations are that Alex will hit land on Wednesday but it should miss the major oil producing areas in the Gulf of Mexico, including the area where BP is dealing with the oil spill.
Gold futures ended the New York session higher on the day, reversing the morning’s losses in the afternoon session.
Gold for August delivery rose $3.80 to $1,242.40 an ounce on the Comex division of the New York Mercantile Exchange.
The release of some shocking US consumer confidence data triggered the flight to the safety of gold.
The consumer confidence index slumped from 62.7 to 52.9, compared with expectations of a small decline. Fears about unemployment are tempering any urge by consumers to spend.
Housing news was slightly more positive. The Case-Shiller index of home prices rose 0.8% in April compared with March and was up 3.8% over the past year. Economists were looking for a 3.4% annual rise.
Copper prices, however, were knocked for six by the Conference Board report on China. The July futures contract tumbled 16 cents to $2.91 a pound.
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