* Investor focus turns away from US election to economy
* Euro zone, Greece worries weigh further on prices
* Oil down as much as 5 pct, wiping out Tuesday rally
* Copper drops more than 1 pct to hit 2-month low
* Raw sugar touches 7-week bottom
By Barani Krishnan
NEW YORK, Nov 7 (Reuters) – Oil prices slumped on Wednesday
more than they had risen the day before and many other
commodities also closed down on worries about the economic woes
facing the United States despite a clear second-term win for
President Barack Obama.
European Central Bank President Mario Draghi’s caution that
the euro zone economy was expected to remain weak “in the near
term” added to investor nervousness. The euro fell to a
two-month low against the dollar, making commodities priced in
the U.S. currency less affordable to holders of the euro.
Crude oil fell faster than stock prices on Wall Street.
The sell-off wiped out a rally in energy markets built on
optimism that the U.S. presidential election will produce a
clear winner who would remove political uncertainties from the
market.
Obama, a Democrat, trumped his Republican challenger Mitt
Romney in the election.
But the president must now cut a deal with Republicans who
control of the U.S. House of Representatives to avert a “fiscal
cliff” of $600 billion in automatic tax increases and spending
cuts that would kick in on Jan. 1. Economists have warned that
failure to reach a deal could spark a recession.
The Thomson Reuters-Jefferies CRB index, a
bellwether for commodities, settled nearly 2 percent lower for
its sharpest one-day drop since Sept. 17. In the previous
session, the index gained 1.6 percent — its most since Aug. 3.
OIL REVERSES TUESDAY GAINS
Much of the CRB’s loss could be attributed to oil, with U.S.
crude making up nearly a quarter of the index’s weighting.
U.S. crude, traded in New York, fell nearly 5 percent
to settle at $84.44 per barrel. It had closed up 3.6 percent in
Tuesday’s pre-election rally.
“Other than the U.S. being a day closer to having to deal
with major fiscal policy issues”, the election had changed
little, said John Kilduff, a partner at New York-based hedge
fund Again Capital LLC.
London’s benchmark Brent crude oil fell 3.8 percent,
or $4.25, to finish at $106.82 a barrel. It had closed up 3.1
percent on Tuesday.
COPPER HITS TWO-MONTH LOW
Copper dropped to a two-month low as investor focus switched
from the outcome of the U.S. election to fiscal issues in Greece
and the weak European economy.
Copper’s three-month futures contract traded in London
closed down 1.2 percent, or $90, at $7,610 a tonne. The
market initially rallied on Obama’s re-election, rising 1.4
percent to an intraday high of $7,806.25, before plumbing to
$7,563.25, near an early September low.
“Investors have discounted the results of the (U.S.)
election and have shifted their attention to other pressing
issues, such as the looming fiscal cliff and a key budgetary
vote going on in Greece,” said Edward Meir, analyst at INTL
FCStone.
The Greek government defeated an early challenge on
Wednesday to an austerity package needed to secure vital
international aid, but faces internal dissent and angry protests
before a final vote.
RAW SUGAR AT SEVEN-WEEK BOTTOM
Raw sugar futures tumbled 3 percent in New York, hitting a
seven-week low on speculative selling.
The sweetener was also hurt by the slump in crude oil
prices, since a significant amount of raw sugar is processed
into the alternate energy source ethanol.
Raw sugar futures’ front month contract in New York
ended down 3.3 percent, or 0.64 cent, at 18.95 cents a lb — its
lowest close since Sept. 20.
Robusta coffee, another “soft” commodity like sugar, rose
slightly after initially setting a nine-month low on worries
about a huge harvest out of Vietnam. Robusta’s second-month
futures in London rose $12 to $1,931 a tonne, after
falling to $1,906 earlier.
Prices at 2:59 p.m. EST (1959 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 84.69 -4.02 -4.5% -14.3%
Brent crude 106.87 -4.20 -3.8% -0.5%
Natural gas 3.578 -0.039 -1.1% 19.7%
US gold 1714.00 -1.00 -0.1% 9.4%
Gold 1720.61 5.27 0.3% 10.0%
US Copper 344.15 -6.45 -1.8% 0.2%
LME Copper 7605.00 -95.00 -1.2% 0.1%
Dollar 80.772 0.159 0.2% 0.7%
US corn 741.00 3.00 0.4% 14.6%
US soybeans 1516.75 0.00 0.0% 26.6%
US wheat 877.00 17.25 2.0% 34.4%
US Coffee 151.20 0.60 0.4% -33.7%
US Cocoa 2399.00 -63.00 -2.6% 13.8%
US Sugar 18.95 -0.64 -3.3% -18.4%
US silver 31.661 -0.373 -1.2% 13.4%
US platinum 1537.50 -18.80 -1.2% 9.4%
US palladium 610.35 -9.80 -1.6% -7.0%
