Global commodity markets were gripped this week by the Malaysia Air MH17 crash in Ukraine, which has raised tensions between Russia — a key producer of many raw materials — and the West.
Investor sentiment was already hit by broadened US sanctions on Russian energy, defence and financial firms to punish what Washington charges are violations of Ukraine’s sovereignty.
“If Russia turns out to have played any part in [Thursday’s] shooting down of a passenger plane over east Ukraine, there is a risk of sanctions being further tightened,” Commerzbank analysts said in a research note. “In this case, it would not only be gas prices in Europe that would react, but also the prices of oil, nickel, copper, aluminum, wheat and palladium — after all, Russia is one of the world’s biggest producers and exporters of these commodities.”
Traders also tracked events in the Middle East, where Israel launched a ground assault on Gaza.
OIL: Crude futures rose following the plane crash and Israel’s incursion into the Gaza Strip.
The crash fueled fears about the Ukraine’s role as a key conduit for Russian gas exports to Europe and Sucden analyst Myrto Sokou said Israel’s assault had stoked oil supply worries in the crude-rich Middle East, but that “market participants remained cautious, holding a wait-and-see approach to the issue.”
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September rose to US$107.66 per barrel from US$106.99 for next month’s contract one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month jumped to US$103.72 a barrel from US$101.35.
PRECIOUS METALS: Gold prices had a roller-coaster week, hitting a three-and-a-half-week low on Tuesday before surging on Thursday due to haven demand.
“The news from east Ukraine has caused the safe haven that is gold to rise noticeably for a time,” Commerzbank analysts said.
Palladium forged a new 13-year pinnacle at US$889.30 per ounce — last seen on Feb. 23, 2001 — propelled by fears over supplies from top producer Russia.
“Any potential supply disruptions [due to sanctions on Russia] will keep palladium bid in a market expected to record large deficits,” Standard Bank analyst Walter de Wet said.
Palladium also won support in recent weeks from strikes in key producer South Africa, but the industrial action ended last month.
By Friday on the London Bullion Market, the price of gold fell to US$1,307.25 an ounce from US$1,335 a week earlier, as silver dropped to US$20.94 from US$21.41.
On the London Platinum and Palladium Market, platinum declined to US$1,497 an ounce from US$1,506, while palladium advanced to US$881 an ounce from US$867.
SUGAR: Prices hit a three-month low in London at US$445.60 per tonne, hit by plentiful supply.
By Friday on LIFFE, London’s futures exchange, the price of a tonne of white sugar for delivery in October stood at US$451, compared with US$457.10 a week earlier.
On the ICE Futures US exchange, unrefined sugar for October dropped to US$0.1698 a pound (0.45kg) from US$0.1716 a week earlier.
COFFEE: Prices went off the boil, falling to a five-month low at US$0.15925 per pound in New York on hopes of a bumper harvest in main producer Brazil.
On ICE Futures US, Arabica for delivery in September slipped to US$0.1638 a pound from US$0.16425 a week earlier.