Raw Commodities Reach 12-month Lows

With the global worries over Europe’s contagion persisting and Greece’s default now seemingly unavoidable, commodity markets went into a sharp downturn today, with Brent crude oil investments falling below the dreaded $100 per barrel threshold. Mining stocks also took a beating.

Reports indicate that the Reuters Jefferies CRB index, which traces the progression of a number of commodity futures, anywhere from orange juice to nickel, posted a 1.4% drop in collective prices, falling lower than it has been since fall of 2010, when the markets were still recuperating from the recession. The index has already lost 13% this month alone, as metal commodity investments in particular have tumbled over the unresolved European debt situation.

Investors responded to the sharp drop by selling off their stock in the ailing commodities. The sell-off was bolstered by Goldman Sachs drastically lowering their expectations for raw commodity futures in 2012. The bank’s forecast for Brent crude oil prices changed from $130 per barrel to $120. Copper’s forecast also suffered a downgrade, falling to $9,200 per tonne from the previous $10,790.

Goldman Sachs however retained their prediction that the markets will likely see the much-needed rebound on a longer stretch. Officials from the bank added that “unless another bout of a global recession takes place, raw commodity futures should finally see the sustained upswing the sector has been waiting for.”

Brent crude oil futures for November delivery show a loss of $2.40, and are now trading at $99.31. The oil commodity is not faring better in the U.S., with New York figures showing another large drop of almost $2 to place crude oil at $75.66 per barrel.

Crude oil investments are currently pricing in a weakened trading environment, as global economic growth is slowing and demand for the oil commodity is faltering as well.

At the forefront of the tumbling commodity investments stands the escalating debt crisis in Europe, which after months of beckoning from other nations still appears to be largely unsolved.

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