World oil prices rose sharply this week as Saudi Arabian jets struck rebel targets in Yemen, sparking fresh supply fears in the crude-rich Middle East.
Many commodities were also buoyed as weak US data sent the US dollar sliding, denting confidence in the world’s top economy and throwing into question the timeline for a long-awaited US Federal Reserve interest rate hike.
The dollar sank as US data showed an unexpected drop in durable goods orders. The flagging greenback makes US dollar-denominated raw materials cheaper for buyers using stronger currencies, which tends to stimulate demand and prices.
Photo: Reuters
OIL: Prices rallied on Wednesday and Thursday after a Saudi Arabia-led coalition bombed Huthi Shiite rebels in support of embattled Yemeni President Abed Rabbo Mansour Hadi.
New York crude struck a one-month high of US$52.48 and Brent oil jumped to a March 9 peak of US$59.78 on Thursday.
Crude futures began soaring as Hadi was rushed to a secure location after a warplane attacked his presidential complex.
“The geopolitical tensions in Yemen are pushing [oil] prices higher,” Phillip Futures investment analyst Daniel Ang said.
“Yemen is not a big producer, but it is a trade hub in the region, so tensions over there could cause a disruption in the trading activities for energy products,” the Singapore-based analyst said.
Yemen — bordered by key Middle East oil producers Saudi Arabia and Oman — has been gripped by growing turmoil since the Shiite rebels launched a power grab in Sana’a last month.
The oil market then fell on Friday, trimming its gains owing to no disruption to oil supplies.
“Oil prices ... are shedding some of the strong gains they had achieved over the two previous days,” Commerzbank analyst Carsten Fritsch said. “It would appear that the initial panicky response to Saudi Arabia’s military intervention in Yemen is giving way to a more sober assessment of the situation.”
Warplanes from the Saudi-led coalition kept up raids against Huthi Shiite rebels on Friday as Hadi headed to an Arab summit to garner support.
There are concerns that an escalation of the conflict could disrupt oil shipments passing through the Bab el-Mandeb Strait, located between Yemen and Djibouti and through which about 3.8 million barrels of oil per day are transported.
Oil gains were capped by fears over the global supply glut, which was made worse by the 11th straight weekly increase in US crude inventories.
The US Department of Energy said commercial crude reserves rallied 8.2 million barrels in the week to March 20, smashing expectations of 4.7 million.
Rising inventories tend to push prices lower because they indicate weakening demand in the world’s biggest crude consuming nation.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in May stood at US$57.81 per barrel, compared with US$54.99 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for May leapt to US$50.16 from US$46.17 for the expired April contract a week earlier.
PRECIOUS METALS: Gold rallied on Thursday to US$1,220.11, its highest level since early this month, on the weak US dollar and as investors sought safety from unrest in Yemen.
“A perfect storm of supporting news has driven the yellow metal to a three-week high,” Saxo Bank analyst Ole Hansen said. “The dollar, equities and bond yields are all trading lower, while safe-haven demand related to the last 24 hours events in Yemen have also been lending support.”
Gold is traditionally regarded by investors as a safe bet in times of geopolitical uncertainty.
By Friday on the London Bullion Market, the price of gold rose to US$1,195.75 an ounce from US$1,183.10 a week earlier.
Silver rallied to US$17.14 an ounce from US$16.17.
On the London Platinum and Palladium Market, platinum gained ground to stand at US$1,138 an ounce from US$1,129.
Palladium declined to US$748 an ounce from US$778.
SUGAR: New York prices on Friday neared a six-year trough at US$0.1222, the lowest since April 2009, on abundant supplies and favorable weather in key producer Brazil.
By Friday on LIFFE, a tonne of white sugar for delivery in May firmed to US$362.90 from US$361.30 a week earlier.
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