Commodity prices mainly fell over the week despite the prospect of further US stimulus, while benchmark oil futures were dragged down by easing concerns over stretched supplies. US Federal Reserve Chairman Ben Bernanke on Monday said that the US central bank would likely keep stimulative policies in place despite improvements to the job market, weighing on the US dollar.
OIL: Prices dropped mainly owing to the increased prospect of Western countries releasing emergency crude reserves.
White House spokesman Jay Carney said on Thursday that while releasing emergency stocks was an option, “no decisions have been made and no specific actions have been proposed.”
Asia’s fuel-hungry economies are once more gathering steam, pushing up prices at a time when the economic recovery remains more vulnerable in some Western economies.
Tensions are also running high in the Middle East, with Iranian exports limited by embargo and political unrest in several oil producers.
France and the US are also in election mode, with both US President Barack Obama and French President Nicolas Sarkozy facing pressure from voters over high pump prices for petrol and diesel.
Talk of releasing strategic reserves is “done purely for political purposes,” Phil Flynn at PFG Best brokers said.
Oil prices also fell this week on data showing that US crude inventories rose by the biggest amount in 20 months last week and on repeated Saudi Arabian pledges to ensure adequate supplies amid a drop in Iran crude exports.
Output from Iran, one of OPEC’s biggest producers has shrunk considerably on the back of sanctions from the US and its Western allies, who believe that Tehran is working toward nuclear weapons capability despite its denials.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month dropped to US$123.24 a barrel from US$125.35 the previous week.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for next month slipped to US$103.33 a barrel from US$108.25.
PRECIOUS METALS: Gold dipped over the week, but not before a brief spike to two-week highs of about US$1,700 an ounce on US dollar weakness.
“Gold prices continue to take their cue from currency moves,” Barclays Capital analyst Suki Cooper said.
A weaker dollar makes commodities priced in the US unit cheaper for buyers using rival currencies, lifting demand.
By late on Friday on the London Bullion Market, gold dipped to US$1,662.50 an ounce from US$1,664 the previous week.
Silver grew to US$32.43 an ounce from US$31.54.
On the London Platinum and Palladium Market, platinum increased to US$1,640 an ounce from US$1,617.
Palladium dipped to US$651 an ounce from US$658.