China doubts weigh on commodities prices

Commodities staged a broad retreat on Monday, with oil dipping below $70 a barrel, as a stronger dollar and cautious comments from Chinese premier Wen Jiabao over the durability of his country's economic recovery weighed on prices.

Mr Wen's suggestion that the drop off in foreign demand for Chinese goods could hamper the country's economic growth knocked the faith of investors convinced that a sharp upturn in Chinese demand would reinvigorate the commodities markets.

The large gains across the raw materials spectrum last week also prompted analysts to question whether the rally had been overbought and a correction was due, with others simply taking profits after a large rise.

"We retain our view for a strong correction in the price of oil from current levels," said Harry Tchilinguirian of BNP Paribas.

"On the fundamental side, a high-level demand cover by inventories in OECD countries, Opec slippage in compliance with stated targets reductions in supply and still weak economic activity combine to put downward pressure on the oil price."

Oil wandered below $70 a barrel, having hit an eight-month high last week of $73.23 a barrel, in part due to a stronger dollar.

Nymex July West Texas Intermediate fell $1.42 to settle at $70.62 a barrel after dipping below $70 in trading. ICE July Brent shed $1.48 to close at $69.44.

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