Oil Set for Biggest Weekly Drop Since 2004 as Commodities Slump

Crude oil tumbled more than $4 a barrel and headed for its biggest weekly decline since December 2004, pacing a slump in commodities on concern the deepening financial crisis will push the global economy into a recession.

Oil in New York fell to the lowest in a year and copper traded at its weakest since March 2006 after the Dow Jones Industrial Average dropped below 9,000 yesterday for the first time since 2003. Gold rose to the highest in nearly 11 weeks as investors sought the metal as a haven after Asian stocks tumbled.

“It doesn’t look like anybody is putting money into commodities anymore except for gold,” said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. “You have to sell out what you have, and that’s the disaster of this credit crisis. Healthy assets are being sold below value just like unhealthy assets.”

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Crude oil for November delivery fell as much as $4.59, or 5.3 percent, to $82 a barrel on the New York Mercantile Exchange, and was at $82.35 at 2:55 p.m. in Singapore. Crude futures are down more than 12 percent this week, and have dropped 44 percent from a record $147.27 a barrel reached on July 11.

“It’s worrying,” said David Moore, the commodity strategist at Commonwealth Bank of Australia in Sydney. “Equity markets are falling dramatically, the credit crisis is spreading and the outlook remains poor.”

Copper for three-month delivery fell as much as 9 percent to $4,830 a metric ton on the London Metal Exchange. The metal is headed for its biggest weekly plunge in more than two decades. Nickel, zinc and aluminum also fell.

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