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A gas flame burns behind oil field workers in Sakhir, Bahrain. (Hasan Jamali/AP)
A gas flame burns behind oil field workers in Sakhir, Bahrain. (Hasan Jamali/AP)

Commodities suffer big weekly drop Add to ...

Oil fell 2 per cent Friday, along with most other commodities, pulling the sector to its largest weekly decline in more than a month as raw materials demand looked likely to falter from a global economic slowdown.

A rise in Wall Street shares and the dollar's decline against the euro did not give commodities the boost that such developments normally do. Instead, investors fretted about the demand outlook for energy, grains and metals in light of the Greek debt crisis and the slow U.S. economy.

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"The fear of the falloff from the Greek debt crisis continues to impact the oil markets," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn.

"Indications of a possible resolution of the crisis have helped pare some of oil's losses but investors worry about the stalling pace of U.S. economic recovery," said Mr. McGillian.

The 19-commodity Reuters-Jefferies CRB index finished down 0.4 per cent as copper, coffee and grains prices fell along with oil. The CRB, which acts as a global benchmark for commodities, posted a weekly decline of nearly 4 per cent - its biggest since it slumped more than 8 per cent for the week to May 6.

The euro surged as Germany and France collaborated on a new debt aid plan for Greece. But investors still braced more fiscal woes in the eurozone.

"While we still believe that a new Greek package will be forthcoming, we warn of ongoing headline risk from rating agencies, the IMF, eurozone politicians and the ECB," said Mark McCormick, currency strategist at Brown Brothers Harriman.

In the United States, consumer sentiment weakened more than expected in June on economic concerns.

The International Monetary Fund also lowered its forecast for U.S. economic growth.

In New York, U.S. crude oil settled just above $93 (U.S.) per barrel - its lowest close since Feb. 18. The market hit a 2011 high of nearly $115 in early May, before coming close to testing the $90 support after losing more than 6 per cent of its value this week.

London's Brent crude finished at $113.21 a barrel, down nearly 5 per cent on the week. Brent had scaled a year high of $127 in April.

Copper was little changed in London, closing at $9,095 a tonne, as investors reacted to erratic U.S. economic data.

Soybean futures in Chicago closed down 1.3 per cent as the slump in crude oil spilled over into the grains market, erasing early strength in corn and wheat as well.

In other crop markets, arabica coffee ended at four-month lows in New York on speculative selling pressured by Brazil's coffee harvest and the prospect of a Greek debt default.

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