Commodities markets summary

A summary of trading in key commodities markets overseas:

ENERGY

Oil prices have slumped, with New York crude striking five-month lows, as the dollar strengthens against the euro on mounting worries over Europe's debt crisis, traders say.

New York's main contract West Texas Intermediate crude for delivery in June is down $US1.52 at $US94.61 a barrel. Earlier on Monday it hit $US93.65 - the lowest point since mid-December.

Brent North Sea crude for June was down $US1.27 at $US110.99 a barrel in late London deals, having reached a near four-month low of $US110.04 earlier on Monday.

Oil futures retreated as the euro tumbled to its lowest point against the dollar since January, as Greek politicians failed again to form a government over the weekend, again throwing into doubt the future of the eurozone.

PRECIOUS METALS

Gold futures slumped Monday to a fresh low for 2012 on mounting concerns about the future of Europe's currency union as Greece struggles to form a coalition government.

The most-actively traded contract, for June delivery, fell $23.00, or 1.5 per cent, to settle at $1,561.00 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices careened 6.2 per cent lower so far in May on fears that Greece won't adhere to the requirements of its second bailout and will be forced to leave the euro zone.

These fears got kicked up a notch Monday as European finance ministers pressured Greece to form a new government and stick to the bailout terms, warning that the Mediterranean country could be ejected from the European Union.

Investors shed gold alongside growth-sensitive assets such as stocks and commodities, prompting concern that the yellow metal continues to trade more like a risk asset rather than a haven. Gold's 30-day average correlation to the Standard & Poor's 500 stock index has recently ticked higher to positive 0.66, on a scale where positive 1.0 means a perfect direct relationship.

BASE METALS

Base metals closed firmly lower on the London Metal Exchange Monday, pressured along with broad financial markets amid persistent concerns over Greece and its future in the euro zone.

At the PM kerb close, LME three-month copper was 2.2% lower on the day at $7,840 a metric ton, having earlier fallen to a four-month low at $7,813/ton. Tin fell by the same margin, closing 2.2% lower at $20,045/ton.

Concerns over the political situation in Greece continued to weigh on market sentiment Monday. The nation is one step closer to having to hold new elections, after the latest attempt to form a coalition government stumbled. The future of Greece's place in the European monetary union is now being called into question.

Since base metals are used widely in construction and manufacturing, economic insecurity tends to weigh on sentiment.

Because the metals are also priced in dollars, the greenback's current strength versus the euro is also denting their appeal to buyers using the single currency.

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