Oil price falls again as commodities rout deepens

Oil lost yet more ground today after its record rout yesterday as investors continued their stampede out of black gold and a host of other commodities amid worries over global growth.

Brent crude fell $2.65 to $108.12 a barrel, off as much as $5 at one point following yesterday's dramatic 10% plunge, and prompting predictions crude could continue its run to around $90.

The fall in commodities across the board comes after disappointing data from the US economy, as well as fears over lower global demand as fast-growing emerging markets step up their fight against inflation.

The imminent end of the Federal Reserve's $600 billion (£364 billion) money-printing programme could also hit growth in the US, which expanded at a disappointing 1.8% annual pace in the first quarter.

Yesterday's "flash crash" in commodities also came a day after commodities trading giant Glencore set a £36.5 billion price on its London float, which many speculate could ring the bell for the top of the market.

Brent has lost more than 12% since Wednesday's close, the biggest two-day fall since the global financial crisis over two years ago.

Silver has plunged nearly 30% since record highs last week, while copper, zinc and tin registered falls of more than 1% today. This leaves the Reuters-Jefferies CRB index, a global commodities benchmark, on course for its biggest weekly fall since July 2008 after slumping around 8% so far as speculators also unwind positions.

CMC Markets analyst Michael Hewson said copper had fallen below key technical levels and added: "A lot of people are long speculatively and they have decided to cash in their chips."

The rush out of commodities has also been fuelled by a strengthening dollar after the European Central Bank signalled a rate rise in June looks unlikely.

Daniel Wills, analyst at ETF Securities, said: "In the near term it is a worry for markets given how far prices have been falling but over the longer term it might be better news for sustainable growth."

Manufacturers wilted under another big rise in input costs in April but experts said the sudden slide in commodity prices would ease pressure on inflation.

Official figures showed crude oil pushing input prices - growing at the fastest annual rate in two-and-a-half years - up 2.6%. Factory gate prices also rose a worse-than-expected 0.8% over the month, with petrol up 1.3% despite the Budget's fuel duty cut.

Markit chief economist Chris Williamson said: "A further easing in manufacturing prices, and inflation, looks highly likely in coming months, given yesterday's rout in the commodity markets."