Sun, Sep 29, 2013 - Page 15 News List

Oil drops due to easing of tensions over Syria, Iran

AFP, LONDON

Global oil prices sank this week on receding tensions over Iran and Syria, while coffee struck another three-year low on the back of plentiful supplies, dealers said.

Sentiment was also hit by the US budget impasse, with lawmakers unable to reach agreement over a budget just days before a deadline that could see parts of the federal government shut down.

OIL: New York crude futures slid as the US and Russia agreed a draft UN Security Council resolution on destroying Syria’s chemical arms, easing Middle East supply worries.

Washington and Moscow agreed the draft council resolution on Thursday, breaking a prolonged deadlock over the bitter conflict that has rocked the oil market in recent weeks.

Prices were also pushed lower by a thaw in relations between the West and Iran, as US Secretary of State John Kerry met Iranian Minister of Foreign Affairs Mohammad Javad Zarif on Thursday.

The meeting raised hopes of an easing of Western sanctions against Tehran over its nuclear program, which would allow the major OPEC producer to export oil more freely.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in November fell to US$108.49 per barrel from US$109.05 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for November dropped to US$102.87 per barrel from US$105.59 for the expired October contract a week earlier.

PRECIOUS METALS: Gold prices dipped on easing demand for the safe-haven metal, but losses were capped by worries over next week’s potential US government shutdown.

“Either way, safe-haven assets such as US Treasuries and gold are likely to stay in demand while equities should remain under pressure,” Capital Economics analyst Jessica Hinds said. “Even if an agreement over the federal spending authority is reached, this would still leave the even bigger worry for investors that the debt ceiling must be raised before the [US] Treasury runs out of money some time shortly after Oct. 17.”

By late on Friday on the London Bullion Market, the price of gold dipped to US$1,341 an ounce from US$1,349.25 a week earlier, while silver slipped to US$21.61 an ounce from US$22.74.

On the London Platinum and Palladium Market, platinum fell to US$1,416 an ounce from US$1,447, as palladium declined to US$725 an ounce from US$726.

COFFEE: Prices forged fresh multi-year low points as sentiment was dogged by speculative selling and the prospect of solid output from key producer Vietnam.

“Selling was tied to ... wire stories highlighting the potential for very strong production in Vietnam this year. The harvest there is about to start and some industry sources in Europe told the wires that production could be as high as 29 million bags,” Price Group analyst Jack Scoville said. “The Vietnamese government estimates production at 25 million bags and private sources in Vietnam have estimated production as high as 27 million bags.”

By Friday on NYBOT-ICE, Arabica for delivery in December rose to US$0.11560 a pound (0.45kg) from US$0.11525 a week earlier.

On LIFFE, Robusta for November eased to US$1,647 a tonne from US$1,680 a week ago.

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