Markets: Oil steadies as commodities consolidate

Oil prices steadied on Monday after a sharp fall in the previous week while base metals were mixed and gold consolidated above the $900 an ounce level as commodity markets made a cautious start to trading, awaiting fresh impetus.

Last week saw equity, commodity and emerging markets all retreat as investors continued to question the sustainability of global economic recovery, ensuring risk appetite remained subdued.

Nymex August West Texas Intermediate dipped 9 cents to $59.80 a barrel while ICE August Brent added 14 cents at $60.66 a barrel, down 7.7 per cent this week.

Last week, the International Energy Agency, the energy watchdog of the developed world, said it expected global oil demand to rise by 1.7 per cent, or 1.4m barrels a day, in 2010, with the increase in demand coming largely from developing countries.

Deteriorating sentiment in the oil market was also reflected in diminishing optimism among hedge funds and other short-term market participants. Speculators reduced their net long position in Nymex crude to 15,357 lots in the week to July 7, from 40,777 lots in the previous week.

Traders said concerns that the Commodities Futures Trading Commission, the US regulator of futures and options markets, intended to crack down on speculation in the oil market by imposing position limits had also had an impact.

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