Commodity prices plunge on grim economic outlook
Oil, gold and industrial metals prices have plummeted after a wave of major U.S. corporations offered a grim snapshot of the economy.
Benchmark crude dropped 2 percent Tuesday to end at $86.67 per barrel, a three-month low. Gold and several industrial metals ended at the lowest prices since early September as worries resurfaced about demand in the stubbornly sluggish economy.
Major companies turned in third-quarter results that missed analyst expectations. Several cut expectations for the rest of the year, blaming the challenging economy. The news sent stocks plummeting, making it one of the worst days on Wall Street this year.
In addition, there has been little progress with the debt crisis in Europe, which also has hurt companies in the U.S. and others that sell goods in the region.
Slower economic growth reduces demand for a wide swath of raw materials, including oil, industrial metals and agriculture crops.
Kingsview Financial analyst Matt Zeman said investors also want to avoid riskier assets like commodities ahead of the upcoming U.S. presidential election.
"I think these are all just unknowns that are driving people to hit the 'sell' button right now," Zeman said. "This economy remains very, very sluggish. It continues to have a very difficult time creating jobs."
Oil fell $1.98 to end at $86.67 per barrel. Heating oil dropped 3.33 cents to $3.0434 per gallon and wholesale gasoline fell 4.25 cents to $2.605 per gallon. Natural gas rose 8.3 cents, or 2.4 percent, to $3.535 per 1,000 cubic feet.
Prices for gold, silver, copper and platinum finished at seven-week lows while palladium dropped to the lowest level since Aug. 16.
In December contracts, gold fell $16.90 to finish at $1,709.40 per ounce, silver fell 45.9 cents to $31.793 per ounce and copper dropped 5.25 cents to $3.5695 per pound. Palladium ended down $28.80 at $593.85 per ounce. January platinum fell $36.60 to $1,575.60 per ounce.
December wheat fell 9.5 cents to end at $8.6875 per bushel, December corn dropped 5.25 cents to $7.56 per bushel and November soybeans rose 6.75 cents to $15.5325 per bushel.