Oil set for record monthly slide

By Julie Crust

LONDON (Reuters) - Commodities fell again on Friday, with oil heading for its worst month on record, pressured by a stronger dollar versus the euro and recession fears.

Oil and copper prices have more than halved since July as the global financial crisis spurred worries that demand will contract alongside economic growth.

The crisis also forced investors to sell once profitable holdings in commodities to cover losses in equities and other investments.

"We are going to see prices remaining under pressure for the time being ... it's a sell-off across all the base metals in response to worries about the demand outlook," said Dan Smith, a metals analyst at Standard Chartered.

Macroeconomic data on Thursday showed the U.S. economy had shrunk 0.3 percent in the third quarter of 2008, the sharpest fall in seven years, escalating recession fears and pushing all commodities lower.

Gold stayed on course for its biggest monthly fall since 1983 and copper, a key gauge of economic activity, notched up its steepest monthly drop since at least 1970, underlining the sector's dramatic swings. Soft commodities were also lower.

The Reuters-Jeffries CRB Index, a global benchmark of 19 commodities, down about 24 percent so far in October, is also set for its largest monthly decline ever.

For a graphic of monthly changes in the Reuters-Jeffries CRB index of 19 commodities, please click here