World oil prices slid this week, reassured by the ouster of Egyptian President Hosni Mubarak on Friday after a violent uprising that helped send the crude market to recent two-year peaks.
Cairo’s streets exploded in joy as Mubarak stepped down after three decades of autocratic rule and handed power to military commanders.
In reaction, oil dipped on receding concerns over possible disruption to crude supplies through the strategic Suez Canal, analysts said.
“Initial reaction will be good for risk assets — and this has seen oil, gold and silver slide and equities rise,” CMC Markets analyst Michael Hewson said. “The key test will be how the military fills the vacuum created by this action, and the -effect this has on risk appetite going forward.”
Commodities were also hit this week by worries over Chinese demand, after the nation’s central bank raised interest rates for the third time in four months as authorities fight to tame inflation.
OIL: Prices dipped, with New York crude tumbling briefly under US$86 per barrel on Friday after Mubarak’s resignation was announced, but London Brent prices held stubbornly above the key US$100 level.
“As Mubarak decided to step down, geopolitical concerns eased and [New York] crude oil prices retreated toward US$86,” Sucden analyst Myrto Sokou said. “The potential shutdown in the operations at the Suez Canal looks very unlikely for the near-term.”
Brent oil prices had rocketed last week to US$103.37, striking the highest level since Sept. 26, 2008, on concerns over the impact of Egyptian unrest on global energy supplies, and the possibility of spreading unrest.
SEB Commodity Research analyst Filip Petersson said that Mubarak’s resignation created more uncertainty.
“Uncertainty is the first thing that comes into mind,” Petersson said in response to the news. “My guess is that we will see a military-led dialogue and optimism in the country over the coming weeks. Some of the risk premium in the crude oil market is likely to fade as a result.”
Oil market experts said the unrest, together with large US energy supplies, was helping to maintain a large gap between the prices of Brent and the benchmark New York crude contract.
PRECIOUS METALS: Gold prices trimmed their gains on Friday as the metal lost some of its safe-haven luster after Mubarak’s resignation.
By late Friday on the London Bullion Market, gold rose to US$1,364 an ounce from US$1,355 a week earlier.
Silver rose to US$30.00 an ounce from US$28.91.
On the London Platinum and Palladium Market, platinum climbed to US$1,829 an ounce from US$1,838.
Palladium gained to US$822 an ounce from US$813.
BASE METALS: Copper prices hit a record US$10,160 and tin soared to a record US$31,800 per tonne, supported by concerns over tight supplies, before ending the week on a subdued note.
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