June 8 (Bloomberg) -- Commodities fell a second day, heading for the longest weekly losing streak in 11 years, on concern slowdowns in China and the U.S., the world’s two biggest economies, will cut demand.
The Standard & Poor’s GSCI gauge of 24 commodities retreated 2 percent by 1:30 p.m. London time, bringing the drop to 0.2 percent this week. That’s the sixth weekly decline and the longest losing streak since March 2001. New York oil declined 2.9 percent and copper in London slumped 3 percent.
U.S. Federal Reserve Chairman Ben S. Bernanke said the Fed will need to assess conditions before deciding if more measures are needed to bolster an economy threatened by Europe’s debt crisis and U.S. fiscal tightening. The Chinese central bank cut its benchmark lending and deposit rates by 25 basis points effective today. The announcement came before China reports inflation, investment and output data this weekend, and may signal the economy is weaker than the government expected.
“The last time that China cut interest rates was in the great economic freeze of 2008 and one has to question what the Chinese rate cut says about the real state of the Chinese economy,” Olivier Jakob, managing director of Petromatrix GmbH, a researcher in Switzerland, said in a report today.
The interest-rate cut by China, which accounts for 41 percent of global copper demand, was the first since 2008 after growth slowed for five quarters. Bernanke told Congress the central bank was ready to act should conditions worsen.
Oil for July delivery fell as low as $82 a barrel on the New York Mercantile Exchange and last traded at $82.34. Copper for delivery in three months dropped to $7,233.25 a metric ton on the London Metal Exchange and last changed hands at $7,268. Gold lost as much as 2.3 percent to $1,556.68 an ounce, the lowest intraday level since June 1.
“Finally the depth of the euro crisis is becoming clear,” said Christopher Bellew , senior broker at Jefferies Bache Ltd. in London, who correctly predicted earlier this week that oil would fall. “We are now seeing the effects of a decade of financial imprudence in Europe, and the extent of the re- structuring that is required is becoming obvious. The desperate state that Europe is in will lead to significantly lower oil prices in the short term.”
China will reduce gasoline and diesel prices by the most since 2008 after global crude costs slumped. Retail gasoline will fall by 530 yuan ($83) a metric ton starting tomorrow and diesel will be cut by 510 yuan, the nation’s National Development and Reform Commission said today.
“I don’t think anybody is really going to be carrying much of a position into the weekend with the China data dump,” said Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Certainly the market is concerned about what the data may bring.”
Copper traders are the most bullish in three months as China reduced interest rates to bolster growth, increasing expectations that prices will rebound from the longest slump in two years.
Sixteen analysts surveyed by Bloomberg said they expect prices to gain next week and seven were bearish. A further eight were neutral, making the proportion of bulls the highest since March 9. Stockpiles in warehouses monitored by the London Metal Exchange, the world’s largest metals bourse, declined 38 percent this year and Morgan Stanley is predicting at least another year of supply shortages.
“Since China is the biggest user of copper, that rate cut should give a little boost,” said Donald Selkin, the New York- based chief market strategist at National Securities Corp., which manages about $3 billion of assets. “The potential for some kind of stimulus package should result in copper finally turning around.”