Oil prices have fallen in recent weeks, after statistics for the US crude and fuel inventories showed significant gains easing concerns about shortages during the Northern Hemisphere winter.
By October 31, the price of benchmark Brent North Sea cured oil for December delivery stood at $27.35 a barrel in London from $28.95 a week earlier. In New York, the reference light sweet crude December contract eased to $28.70 per barrel from $30.57.
The US Department of Energy said crude oil stocks had risen by 3.6 million barrels over the past week to 291.8 million, with inventories of distillates, which include heating fuel also increasing easing fears about low stocks ahead of the winter. Prices got little support from the 3.5 per cent production cut the Organization of Petroleum Exporting Countries.
Gold
Gold prices have risen above $390 per ounce. On the London Bullion Market, the spot price of an ounce of gold rose to as high as $391.30 on October 30, close to a seven-year high of $393 seen in late September.
But the precious metal gave back some of its gains after the dollar rose on figures showing the US gross domestic product soared 7.2 per cent in the third quarter. A stronger US unit makes gold less attractive to people buying the dollar-traded metal with other currencies.
“Gold reversed near its seven-year high on a higher dollar, with month end window dressing extending profit taking,” said analysts Andy Maag at the Swiss bank UBS. “In the longer run, the high US economic growth should bolster gold on inflation expectations and on a widening of the current account deficit, which would further hurt the dollar,” he added. Gold’s early gain followed strong buying in Japan after a fall to a three-year low for the US dollar against the yen.
The latest report, from the Commodity Futures Trading Commission showed speculators were still holding near record long position in gold, an indication that investors are expecting higher prices.
The CFTC said more than one million ounces were added in the week to October 21, taking the total of 15.3 million ounces, or 1.5 million ounces below the record set in September.
Platinum
Platinum prices have broken above $750 per ounce for the first time in 23 years, James Moore, analyst at The Bullion Desk, said the weakness in the yen and the large fall in the Nikkei prompted some investors to switch into precious metals, pushing both platinum and gold prices higher during Asian trade. The rising trend continued in Europe, before gold started to fall on wave of speculative selling.
Copper
Base metal prices have gained in recent weeks, as the world’s biggest economy shows improved signs. The US consumer confidence has improved and new durable goods orders have added to the rising optimism.
Copper reached a six-year high on October 30 to $2070, dragging all the other metals higher. By October 31, three-month copper prices had risen to $2065 per tonne on the London Metal Exchange from $1970 a week earlier.
The world’s second largest copper mine is to undertake expansion. The BHP Billiton said it would resume full production at the Escondida copper mine in Chile, which it operates and in which it owns a 57.5 per cent stake.
The 200,000 tonne increase in output is equivalent to about a quarter of the world’s idle copper production capacity. The return to full capacity at Escondida comes about a year after BHP Billiton cut production at the mine in response to low prices, when they were about 35 per cent below the current prices.
The Chinese government had started to sell some of its strategic copper stockpiles, estimated to be about 300,000 tonnes, to the Shanghai Futures Exchange — a move that effectively makes the metal more available to consumers of copper.
Analysts said copper prices could peak at upto $2400 a tonne next year, still well short of the $3000 a tonne price reached in 1995. World stockpiles have halved from 1.5 million tones over the past 18-month to the current level of about 890,000.
Once copper inventories fall to 800,000 tonnes, Codelco, the world’s largest producer, plans to release its 200,000-tonne stockpile, which it has taken off the market. Codelco, owned by the Chilean government, has used this stockpile to act as a buffer should stocks start reaching relatively low levels and prices rise too quickly.
The International Copper Study Group estimated that the copper market had consumed almost 300,000 tonnes more than it produced in the seven months to July this year, and is expected to remain in deficit for the rest of the year and next. Analyst said with the market set to remain in deficit for the next 18 months, more copper mines will reopen.
