Oil leads market rout as China sends investors fleeing

[August 24, 2015]  By Eric Onstad and Henning Gloystein

LONDON/SINGAPORE (Reuters) - Commodity markets lurched lower on Monday after Chinese equities resumed their slide, fuelling worries of a hard landing in the world's biggest consumer of raw materials.

Crude oil tumbled to its weakest levels in 6-1/2 years while industrial metals prices also hit multi-year lows amid a broad sell-off of risky assets.

Investors took flight after the Chinese stock market posted its biggest one-day loss since the height of the global financial crisis in 2007, plunging more than 8 percent.

The 19-commodity Thomson Reuters/Core Commodity CRB Index <.TRJCRB> has shed more than 16 percent so far this year.

Oil led the downward charge as Brent crude futures <LCOc1> fell more than $2 a barrel to their lowest since March 2009.

"Today's falls are not about oil market fundamentals. It's all about China," Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told Reuters Global Oil Forum.

"The fear is of a hard landing and that things get out of the control of the Chinese authorities."

Brent touched an intraday low of $43.28 a barrel, a fall of 4.7 percent.

In metals, copper and aluminum hit their lowest since 2009 while iron ore and steel futures in China slid sharply to reach their downside limit.

Three-month copper on the London Metal Exchange fell as much as 3 percent to $4,903 a tonne, its lowest since July 2009. Copper has shed 22 percent in 2015, on track for its third consecutive yearly fall.

Gold edged down, but remained close to a seven-week high as the dollar and shares tumbled.

Spot gold shed 0.5 percent to $1,154.81 an ounce as investors took profits after the metal hit its highest since July 7 on Friday.

"Gold is holding on to some of the gains it made last week and that speaks to the difficulty in the global equity market right now," Mitsubishi Corp strategist Jonathan Butler said.

Grains also took a hit as U.S. soybeans fell to a fresh six-year low, corn lost more than 1 percent and wheat slid 2 percent to a near two-week low.

An improved U.S. supply outlook also weighed on prices and Chicago Board of Trade November soybeans, the most actively traded contract, fell more than 2 percent to a contract low of $8.71-1/2 a bushel.

In coal, the most common fuel source for electricity generation, API2 2016 futures hit 12-year lows last week, and physical prices for cargoes from Australia's Newcastle or South Africa's Richards Bay terminals are back to levels last seen before the 2008/2009 boom and bust.

(Additional reporting by Karolin Schaps, Naveen Thukral, Pratima Desai, Clara Denina and Colin Packham; Editing by Dale Hudson)

[© 2015 Thomson Reuters. All rights reserved.]

Copyright 2015 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.