Sun, Jun 16, 2013 - Page 15 News List

Oil prices buck the trend as commodities suffer

VOLATILE:While oil prices were lifted by the ongoing crisis in Syria and gold gained ground on safe-haven demand, metals, cocoa and coffee all fell

AFP, LONDON

World oil prices finished on a high note on geopolitical worries in Syria, having begun the week on the back foot following news of strong OPEC oil output, US shale production forecasts and Chinese demand fears.

Other commodities were dented somewhat by weak Chinese data and after the World Bank slashed its growth forecast for China’s economy this year to 7.7 percent from 8.4 percent.

Markets were also roiled by fears of central banks pulling the plug on their extraordinary stimulus measures that are aimed at supporting global economic growth.

OIL: World oil prices spiked on Friday, lifted by geopolitical worries particularly in Syria, alongside the weak US dollar which stimulates demand.

New York’s light sweet crude rallied to US$98.25 a barrel, reaching a level last seen on September 14, last year.

“Supply worries as a result of escalating tensions in Syria and the continued weakness in the [US] dollar, helped drive WTI oil contract through the US$98 level for the first time in nine months,” IG analyst Brenda Kelly said.

Brent North Sea crude for delivery next month jumped to US$106.64 a barrel, the highest point since April 5.

However, the market had made a poor start to the week.

Citing secondary sources, OPEC said its output last month averaged 30.57 million barrels per day, up by 106,000 barrels from April.

“Oil prices dropped in the first part of the week, dragged down by strong oil production from both OPEC and non-OPEC sources,” said analyst Gary Hornby at energy consultancy Inenco.

However, since that point, the market has rebounded sharply on growing worries about the oil-rich Middle East.

“Oil prices have since found support ... on the back of Middle Eastern tensions, with Syria and Libya at the fore,” Hornby added.

Oil had also risen on Thursday following positive economic news from the world’s biggest crude consuming nation.

PRECIOUS METALS: Gold gained ground on safe-haven demand, also amid renewed market tensions over Greece.

“The Greek government’s decision to shut down state television to save money has given rise to speculation on the market about a possible vote of no confidence in the parliament,” Commerzbank analysts said.

By late on Friday on the London Bullion Market, the price of gold increased to US$1,391.25 an ounce from US$1,386 a week earlier.

Silver eased to US$21.69 an ounce from US$22.60.

On the London Platinum and Palladium Market, platinum fell to US$1,448 an ounce from US$1,505.

Palladium decreased to US$728 an ounce from US$754.

BASE METALS: Base or industrial metal prices fell in reaction to disappointing economic data in key consumer China.

“Most important was the tranche of surprisingly weak Chinese data, including a collapse in trade, a deceleration in industrial production and slowing property investment,” Barclays analysts said.

By Friday on the London Metal Exchange, copper for delivery in three months sank to US$7,089 a tonne from US$7,245 a week earlier.

COCOA: Cocoa futures pulled back from gains made the previous week, as traders eyed the improving supply outlook in key producers in West Africa.

“Improving West African crop prospects took the top off last week’s strong gains,” Public Ledger analysts said.

By Friday on New York’s NYBOT-ICE exchange, cocoa for September slipped to $2,301 per tonne from $2,341.

COFFEE: Prices sank to a fresh low in New York, weighed down by surplus expectations in Brazil.

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