Oil prices fell almost $2 a barrel on Monday as commodity markets moved lower in response to stock market weakness and a rebound in the US dollar.

Nymex December West Texas Intermediate dropped $1.82 to $78.68 a barrel after hitting $81.58 earlier in the session while ICE December Brent lost $1.66 to $77.26 a barrel.

“Energy demand is still soft, Opec quotas are being exceeded with impunity as shown by the fact that crude oil inventories are still relatively high, while geo-political variables, like Iran and Nigeria, seem to be fading as perennial bullish wild cards,” said Ed Meir, of MF Global.

Over the weekend, militants in Nigeria declared an indefinite ceasefire after the government agreed to discussions with their representatives.

Gold fell 0.8 per cent to $1,046 a troy ounce after ending New York’s session on Friday at $1,054.45.

Speculators have continued to bet heavily on gold prices extending their rally.

The latest data from the Commodities Futures Trading Commission showed that the speculative net long position fell 1.5 per cent to 250,107 lots in the week ending October 20 from a record 253,955 lots in the previous week.

Base metals were mixed as traders digested the latest Chinese trade data showing robust demand for refined metals in September.

Reports that labour contract negotiations at the Spence mine in Chile had broken down over the weekend provided support for copper, which hit $6,730 a tonne, a 14-month high.

It later retreated to $6,600, down 0.7 per cent on the day

China’s imports of refined copper rose 30 per cent in September compared with the previous month.

Traders said the Chinese government’s massive stimulus programme combined with the availability of cheap financing was encouraging speculation by merchants who had accumulated substantial copper stocks.

“Nobody wants to sell,” said one trader. “They believe copper prices will go back to the old highs of last year of Rmb70,000 a tonne from the current Rmb 51,000-a-tonne level.”

Copper prices have risen 115 per cent this year but Michael Jansen, analyst at JPMorgan, warned that the rally was now happening “on virtually nil support from the physical market”.

Mr Jansen noted that London Metal Exchange copper stocks were continuing to rise and said China had accumulated a supply surplus of 100,000 tonnes in September alone.

Agricultural commodities moved lower in spite of ongoing concerns about the US corn and soyabean harvests, which have fallen well behind schedule because of adverse weather conditions across the Midwest.

CBOT December corn lost 15¼ cents at $3.82½ a bushel while CBOT November soyabeans fell 22 cent to $9.84 a bushel and CBOT December wheat retreated 15¾ cents to $5.32 a bushel

“Crop progress so far is the worst since the 1980s,” said Michael Lewis, commodity strategist at Deutsche Bank, who noted that this year’s corn harvest was 30 per cent behind schedule, while in soyabeans, the equivalent figure was 43 per cent. Mr Lewis said the US Department of Agriculture could be expected to cut its production and yield estimates for corn and soyabeans on November 10.

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