Sun, Sep 01, 2013 - Page 15 News List

Oil surges as Syria threat rocks commodity markets

AFP, LONDON

Commodities were gripped this week by the threat of military strikes in Syria, with New York oil hitting a two-year high on fears of a wider conflict, analysts said.

Gold jumped to multi-month peaks, as many investors parked their cash in the precious metal, widely regarded as a safe haven in times of geopolitical turmoil.

OIL: The market surged on Wednesday in anticipation of Western military strikes on Syria, with New York crude striking US$112.24 per barrel, which was the highest level since early May 2011.

Brent oil soared to US$117.34 a barrel, last seen in late February.

Prices then fell back on Thursday and Friday, as prospects receded for an imminent strike against Syria over its alleged use of chemical weapons.

“Oil prices continue to be under the spell of the Syrian crisis,” Commerzbank analyst Carsten Fritsch said.

Although Syria is not a major oil producer, traders are nervous about a broader conflict in the Middle East, including in Iraq, which is becoming a major exporter.

US plans to build an international coalition for a “limited” strike on Syria suffered a blow when British lawmakers on Thursday voted against the use of force.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in October advanced to US$114.74 a barrel compared with US$111.06 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September increased to US$108.02 per barrel, from US$106.20.

PRECIOUS METALS: Gold leapt on Wednesday to US$1,433.83 per ounce — the highest level since May 14 — as investors flocked to the precious metal.

Sister metal silver touched US$25.10 an ounce, attaining a level last seen in mid-April.

Platinum also struck the highest point since April, at US$1,555 per ounce, boosted by strikes in key producer South Africa.

“The prospect of Western military intervention in Syria has really weighed on risk appetite this week, with investors pulling their money out of risky positions such as equities, particularly in the emerging markets, and instead opting for safe haven assets, including Gold and US Treasuries,” Apari analyst Craig Erlam said.

“Gold has re-emerged over the last few weeks as the preferred safe haven asset for investors,” he added.

By late Friday on the London Bullion Market, the price of gold rallied to US$1,394.75 an ounce from US$1,377.50 a week earlier.

Silver climbed to US$23.64 an ounce from US$23.06.

On the London Platinum and Palladium Market, platinum eased to US$1,527 an ounce from US$1,538.

Palladium declined to US$741 an ounce from US$752.

BASE METALS: Base or industrial metals mostly fell in line with global stock markets.

“Metal prices have come under pressure from the pull of falling equity markets, growing geopolitical risks and a firmer US dollar,” Commerzbank analysts said.

“We believe there is little fundamental justification for the weak prices and feel instead that they need to catch up with other economic indicators such as equities,” the analysts said.

“The current recovery of the Chinese economy in particular is likely to help drive prices up,” they said.

By Friday on the London Metal Exchange, copper for delivery in three months fell to US$7,111.75 a tonne from US$7,335 a week earlier.

Three-month aluminium slid to US$1,820 a tonne from US$1,885.

Three-month lead declined to US$2,162 a tonne from US$2,214, while three-month tin eased to US$21,150 a tonne from US$21,919.

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