The escalating violence in Iraq, a weaker US dollar and Chinese growth prospects inspired a rally in crude oil and metals prices this week, traders said.
OIL: Brent hit nine-month peaks as dealers tracked the sectarian conflict in crude exporter Iraq.
“Predominant gains this week have derived from the ongoing siege of Iraq’s largest oil refinery, Baiji,” Inenco analyst Dorian Lucas said. “Thus far the gains in Brent crude are based around sentiment that oil supplies from OPEC’s second-largest producer may be disrupted. [Yet] Even with the siege of the Baiji oil refinery, no export supply has been disrupted, as this facility is used for the production of domestic consumption products.”
On Thursday, Brent reached US$115.71 a barrel, the highest point since September last year. Brent is a benchmark for the pricing of Middle East crude.
“Oil saw support from the risk of conflict in Iraq disrupting oil supplies, as the US said it would send military advisers to the country,” Singapore’s United Overseas Bank said in a note to clients.
US President Barack Obama on Thursday announced that he was ready to send 300 advisers to Iraq and if necessary to take “targeted” and “precise” military action to counter radical Sunni fighters.
Iraq has more than 11 percent of the world’s proven resources and produces 3.4 million barrels a day.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in August was US$114.66 a barrel, compared with the US$113.29 recorded a week ago in crude for next month.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month gained to US$107.13 a barrel from US$106.64 a week earlier.
PRECIOUS METALS: Safe haven gold rallied due to investor concern over Iraq, which pulled sister metal silver up to a three-month high of US$20.98 an ounce on Friday.
Gold reached a two-month peak of US$1,322.41 an ounce on Thursday as precious metals also benefited from the greenback weaking against rival currencies, pushing up demand for commodities priced in the US unit.
By Friday on the London Bullion Market, the price of gold jumped to US$1,312.50 an ounce from US$1,273 a week earlier, as silver rose to US$20.62 from US$19.58.
On the London Platinum and Palladium Market, platinum climbed to US$1,456 an ounce from US$1,437, while palladium advanced to US$829 from US$816.
BASE METALS: Prices rose across the board, with zinc reaching a 16-month high at US$2,179 a tonne on Friday. Three-month zinc jumped to US$2,172.25 a tonne from US$2,083 last week.
“The supply side of zinc remains heavily constrained given the number of large mines around the world that have recently come to the end of their commercial lives or are imminently about to do so,” Natixis SA analysts said. “With even a modest rise in global demand for zinc, this will leave the market facing a growing deficit.”
Base metals prices generally were supported by a falling dollar and on Chinese growth prospects.
“The Chinese [Premier] Li Keqiang (李克強) was surprisingly unequivocal in his assertion that the government would not accept [annual] economic growth of below 7.5 percent,” Commerzbank analysts said about comments Xi made during a visit to London.
By Friday on the London Metal Exchange, copper for delivery in three months climbed to US$6,779.75 a tonne from US$6,649.75 a week ago, as three-month aluminum rose to US$1,894 from US$1,841.50, lead hit US$2,146 from US$2,080, tin gained to US$22,650 from US$22,600 and nickel reaches US$18,523 from US$18,087.
COFFEE: Prices fell, with arabica hitting four-month lows at US$0.16655 a pound (0.45kg) on Thursday.
“Prices on the coffee market remain highly volatile,” Commerzbank analysts said.
On ICE Futures US, Arabica for delivery in September fell to US$0.117050 a pound from US$0.1178 a week earlier. On LIFFE, Robusta for September fell to US$1,978 a tonne from US$1,988 for next month’s contract.
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