Oct. 22 -- Oil, gold and copper prices fell on speculation credit-market losses may stunt economic expansion, curbing demand for energy and metals.
Declines in the three commodities follow a statement from the Group of Seven nations expressing concern that U.S. subprime loan defaults may prompt a growth slowdown. Copper fell to a five-week low, while gold slipped from its highest in 27 years. Oil retreated after last week touching a record above $90 a barrel.
``It's concern about the U.S. economy and the impact of a slowdown of the U.S.'' which is driving oil prices down, said Eugen Weinberg, a commodities analyst at Commerzbank AG in Frankfurt. ``The U.S. alone is responsible for a quarter of overall oil consumption.''
Crude oil for December delivery, the most actively traded contract on the New York Mercantile Exchange, fell as much as $2.22, or 2.6 percent, to $84.73, and traded at $85.63 at 2:03 p.m. London time. The November contract, which expires today, was down $1.42 at $87.18.
Oil also declined after the U.S. Defense Secretary Robert Gates said a Turkish raid on rebels in Iraq, home to the world's third-largest oil reserves, wasn't ``imminent.'' Oil touched an intraday record of $90.07 on Oct. 19, the highest since futures began trading in 1983, after Turkish lawmakers approved a resolution on military force.
``Turkey's relationship with northern Iraq is a never-ending story,'' said Johannes Benigni, managing director at PVM Oil Associates GmbH in Vienna. ``The downside risk is clearly mounting and I don't count on this oil price to stay here very much longer.''
Financial Turbulence
Recent financial market turbulence, high oil prices and weakness in the U.S. housing market are likely to ``moderate'' global expansion, officials said in a statement after the meeting G-7 finance ministers and central banker in Washington on Oct. 19.
``We could see a real slow-down in demand if the U.S. economy starts to slow and goes into recession,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts.
Brent crude for December settlement was trading down $1.50 at $82.29 a barrel on the London-based ICE Futures Europe exchange at 2:06 p.m. local time.
Twenty of 29 analysts surveyed by Bloomberg News on Oct. 19 said crude oil may decline this week because high prices have slowed demand growth, allowing U.S. fuel stockpiles to increase.
U.S. Defense Secretary Gates, after meeting his Turkish counterpart, said he ``didn't have the impression'' military action was ``imminent.''
Border Tension
The U.S. says it wants Turkey to show restraint as a cross- border offensive against the Kurdistan Workers party, or PKK, may exacerbate regional violence.
The latest clash yesterday between Turkey's army and Kurdish militants near the border with Iraq killed 44 people. Thirty-two members of the Kurdistan Workers' Party, or PKK, who had crossed into Turkey from Iraq, and 12 Turkish soldiers died in the fighting, the Turkish armed forces said on its Web site.
Copper for delivery in three months on the London Metal Exchange fell $154, or 2 percent, to $7,716 a metric ton by 2 p.m. in London. It earlier fell as low as $7,695.
``There is a fear of slower economic growth that would directly link to slower demand for base metals,'' Peter Fertig, a commodity consultant at Dresdner Kleinwort, said today by phone from Hainburg, Germany.
Gold for immediate delivery fell $13.69, or 1.8 percent, to $752.80 an ounce at 1:56 p.m. London time. It rose to a 27-year high of $771.10 an ounce on Oct. 19.
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