World oil prices rose this week on concerns that heightened geopolitical tensions could disrupt Middle East supplies, despite a market awash with crude.
Traders were turning their attention to next week’s OPEC output meeting to see if the oil producers’ cartel will slash high output levels.
The 12-nation OPEC, which counts the world’s biggest oil producer, Saudi Arabia, among its members, as well as Nigeria, Venezuela and Iran, holds a regular meeting in Vienna on Friday next week.
Most analysts expect the cartel to stick to its decision taken at the last meeting in June, when OPEC defied calls to cut output despite sliding oil prices, extending its strategy of preserving market share and fending off competition from the US shale energy boom.
Downward pressure on the oil market this week was capped by the shooting down by Turkey of a Russian fighter jet on the Syrian border.
However, reports that Russia is not taking military action against Turkey in retaliation eased fears that the tense situation in the region could escalate and disrupt Middle East oil supplies.
Moscow said retaliatory measures would focus on using its leverage to tighten the screws on Turkey’s economy, including halting joint economic projects.
By late on Friday in London, Brent North Sea crude for delivery in January edged higher to US$44.93 a barrel from US$44.66 a barrel one week earlier.
US benchmark West Texas Intermediate for January stood at US$42.02 a barrel, compared with US$40.39 for the expired December contract one week earlier.
PRECIOUS METALS: Gold fell to the lowest in five years as speculation that US policymakers will raise interest rates next month helped boost the dollar, curbing the metal’s appeal as an alternative asset.
The greenback climbed as much as 0.3 percent against a basket of 10 currencies on Friday to near the highest since at least 2004.
Odds that the US Federal Reserve will increase rates next month for the first time since 2006 advanced to 72 percent on Friday, from 35 percent a month ago, Fed-fund futures data show.
Bets on higher rates have risen as a resilient US labor market powers consumer spending, adding to signs that the economy may be robust enough to withstand higher rates.
Tighter monetary policy reduces the allure of gold because it does not pay interest, unlike competing investments. Assets in exchange-traded products backed by the metal have fallen to the lowest since 2009, while hedge funds are holding a net-short position.
Gold futures for February delivery declined 1.3 percent to settle at US$1,056.20 an ounce at 12:45pm on the Comex in New York. Earlier, the price fell to US$1,051.60, the lowest since February 2010.
Holdings in gold-backed ETPs fell for a sixth straight day through Wednesday to 1,493.5 tonnes, data compiled by Bloomberg show.
Silver futures for March delivery fell 0.9 percent to US$14.048 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for January delivery fell 1 percent to US$835.80, while palladium futures for March delivery slid 0.2 percent to US$550.65 an ounce.
BASE METALS: A rebound in industrial metals underpinned gains in Asian materials producers ahead of data on Chinese industrial company profits, while crude oil retreated.
Base metals, with the exception of nickel, extended Thursday’s advances in London, propelling regional mining stocks higher for the first time this week amid signs China may act to prop up local metals prices. US index futures climbed ahead of a shortened trading day in New York following Thanksgiving. US oil dropped as concern over tensions in the Middle East abated. The dollar hovered near a a seven-month high versus the euro.
Prospects China may intervene in the domestic metals industry to stop excessive futures short selling bolstered base metals prices, with the largest copper and nickel suppliers planning to meet this week to weigh their response to the slump in prices.
Copper for three-month delivery climbed 1.1 percent to US$4,688 a tonne in London, with futures for March delivery up 3.1 percent on the Comex from Wednesday’s close. Aluminum and zinc gained at least 0.8 percent, while nickel was unchanged following a 3.2 percent jump on Thursday.
The LME Metals Index, which tracks six primary metals, climbed 2.2 percent last session to its highest close since Nov. 13.
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