Commodities slid from the highest level in almost six months on speculation that the threat to energy and agricultural supplies from escalating tension in Ukraine’s Crimea region may be exaggerated.
The Standard & Poor’s GSCI Index of 24 raw materials declined as much as 1.2 percent to 652.05, after surging 1.6 percent yesterday to the highest level since Sept. 6. The gauge was at 653.58 as of 12:23 p.m. in London. Brent crude lost 1.5 percent, wheat slid 1.1 percent in Chicago, and gold futures fell 1.3 percent in New York. Corn also dropped.
Commodity prices slid today after Russian President Vladimir Putin ordered soldiers in western Russia to return to their bases by the end of the week after military exercises ended on schedule. Global stocks fell the most in a month yesterday and haven assets soared after Russia, the world’s largest energy exporter, seized control of the Black Sea region of Crimea in Ukraine.
"The selloff is expected given the recent price spikes, as no one really believes that there’s going to be an all-out war in Europe," said Gordon Kwan, the head of regional oil and gas research at Nomura Holdings Inc. in Hong Kong. "Oil prices should ease back."
The GSCI’s 14-day Relative Strength Index rose to almost 73 yesterday as prices surged. Readings above 70 signal to some investors that gains may have been excessive. It was at 63.5 today. The index advanced 3.4 percent this year, rebounding from a 2.2 percent drop in 2013.
Wheat surged the most since 2012 yesterday on speculation the crisis may cut exports from Ukraine, which is set to be the world’s sixth-largest exporter this year. Oil jumped on concern Russian shipments may be disrupted.
"What’s happening in Russia was hyped up, a bit overblown," said Soeren Bo Duvier Nielsen, a senior energy sales manager at Nordea Markets in Singapore.
Brent fell as much as $2.09, or 1.9 percent, to $109.11 a barrel on the ICE Futures Europe Exchange in London. West Texas Intermediate crude slid $1.44 to $103.48 a barrel in New York.
About 313,000 barrels of crude a day traveled through Ukraine in 2013, according to the country’s Energy Ministry. The southern branch of the Druzhba pipeline, which transports about 1.2 million barrels of Russian oil to Europe, passes through Ukraine on its way to refineries in Hungary, Slovakia and the Czech Republic.