Sun, Oct 14, 2012 - Page 15 News List

Oil spikes as Syria-Turkey crisis continues

AFP, LONDON

Commodity markets mostly fell this week as investor sentiment was rocked by gloomy downgrades to global economic growth forecasts, but oil prices spiked on geopolitical worries surrounding Syria.

The IMF slashed its growth forecasts for countries across the world, citing the festering debt crisis in Europe, a stuttering recovery in the US and a slowdown in commodities-hungry China.

The IMF cut its global growth forecast for the year to 3.3 percent, from its estimate in July of 3.5 percent, with Asia still leading the pack of expanding regions while Europe contracts an expected 0.4 percent this year.

Global growth will only hit 3.6 percent next year — lower than the 3.9 percent predicted in July — as even powerful emerging economies like China, India and Brazil hit the brakes, the Fund said.

“As the world is dealing with falling growth and lower corporate earnings, commodities need to adjust accordingly. The IMF report this week was a catalyst, not new news,” Saxobank economist Steen Jakobsen told reporters.

The World Bank meanwhile slashed its annual economic growth forecast for developing countries in East Asia and the Pacific to 7.2 percent, dragged down by China’s worst economic performance in 13 years.

It added that China’s economy — a key consumer of many raw materials — would grow just 7.7 percent this year, down from 9.3 percent last year and its slowest rate since 1999.

OIL: Crude oil prices soared to their highest levels for three weeks, driven by fears of an escalating crisis between Syria and Turkey.

“The support ... has come from the rising tensions in the Middle East as Turkey and Syria start facing up to each other,” head of market analysis at trading firm Capital Spreads Angus Campbell said.

Brent jumped on Thursday to US$116.02 a barrel — the highest level since Sept. 17. On Wednesday, New York crude hit US$93.66 — last reached on Sept. 21.

Oil had already rallied by about US$3 on Tuesday on heightened concerns that the Syrian conflict could spread to Turkey after border skirmishes over the past week.

Turkey’s interception on Wednesday of a Syrian Air aircraft en route from Moscow to Damascus, forcing it to land in Turkey, added to tensions that have seen cross-border shelling.

Ankara says the plane was carrying military equipment and ammunition for the Syrian government, which along with Russia has angrily rejected the allegation.

Brent oil prices have also won strong support this week from delays to scheduled maintenance on facilities in the North Sea.

At the same time, sentiment was dampened by economic growth forecast downgrades from the IMF, the World Bank and the Asian Development Bank.

In another blow, the International Energy Agency on Friday trimmed its forecast for crude demand growth over the next five years, sparking a round of profit-taking.

By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in November leapt to US$114.73 a barrel from US$111.80 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for November soared to US$92.24 a barrel, from US$90.31 a week earlier.

PRECIOUS METALS: Gold fell on profit-taking, having surged close to a one-year peak the previous week, dragging other precious metals lower.

By late Friday on the London Bullion Market, gold dipped to US$1,766.75 an ounce from US$1,784 a week earlier.

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