Oil prices tumble as strong dollar hits commodities
LONDON, April 16: Oil prices slumped this week after an unexpected sharp rise in US crude inventories and the likely prospect of a production hike by Opec helped to assuaged fears about possible shortages. Cocoa, coffee and sugar futures hit multi-month low points on selling by speculative funds.
The Commodities Research Bureau’s index of 17 commodities dropped to 304.90 points on Friday from 313.23 points the previous week.
GOLD: Gold prices fell this week after the dollar strengthened and ahead of a weekend meeting of Group of Seven finance ministers and central bankers that could see discussions about the IMF possibly selling some of its gold reserves to finance debt relief for poor nations.
“There is a good chance that there will be one or more announcements regarding the IMF gold sale” at the G7 meeting in Washington, said UBS analyst John Reade.
The dollar, meanwhile, rose this week against major rivals despite weak US economic data as the market focus turned away from structural difficulties that have afflicted the currency over the last couple of years.
In recent weeks the US currency has been buoyed as investors placed greater weight on developments related to interest rate differentials than on structural concerns relating to the twin deficits.
A stronger dollar makes gold — which is priced in the US unit on world markets — more expensive for buyers using other currencies.
On the London Bullion Market, gold prices fell to 423.45 dollars per ounce at the late fixing on Friday from 425.20 dollars the previous week.
SILVER: Silver prices struggled but managed to remain above the psychological 7.0-dollar mark.
“Silver mirrored the movements of gold,” said James Moore of specialist website TheBullionDesk.com.
“As with gold, silver’s next movements will depend largely on the dollar,” he added.
On the London Bullion Market, silver prices dropped to 7.01 dollars per ounce at the late fixing Friday from 7.03 dollars the previous week.
PLATINUM AND PALLADIUM: Platinum and palladium prices rose strongly in the wake of a report that forecast high average price levels for the sister metals.
“Platinum and palladium fared better (than other precious metals) with platinum buoyed by the release of the GFMS annual forecast, predicting the metal could rise to 1,000 dollars per ounce, should the dollar continue lower,” Moore said.
The London-based GFMS precious metals consultancy had forecast that platinum would trade between 790 and 1,000 dollars per ounce during the remainder of the year, while palladium would situate between 170 and 240 dollars.
By Friday, platinum prices rose to 861 dollars per ounce on the London Platinum and Palladium Market on Friday from 858 dollars the previous week.
Palladium prices advanced to 198 dollars per ounce on Friday from 196 dollars.
BASE METALS: Base metals tumbled after the dollar rallied.
“Base metals suffered a marked correction as the surprising rebound in the dollar... was the catalyst for fund profit-taking right across the (base metals) complex,” Barclays Capital analyst Ingrid Sternby said.
Copper reached a fresh historical record price level of 3,338 dollars per ton on Tuesday amidst tight inventories, before falling in line with other base metals.
By Friday, three-month copper prices slid to 3,156 dollars per ton on the London Metal Exchange Friday from 3,274 dollars a week earlier.
Three-month aluminium prices fell to 1,861.50 dollars per ton Friday from 1,946.50 dollars.
Three-month nickel prices dropped to 15,600 dollars per ton on Friday from 16,150 dollars.
Three-month lead prices declined to 911.50 dollars per ton Friday from 962 dollars.
Three-month zinc prices dived to 1,268.50 dollars per ton Friday from 1,372 dollars.
Three-month tin prices unravelled to 8,100 dollars per ton Friday from 8,275 dollars.
OIL: World oil prices slumped to the lowest close in nearly two months this week after US crude stockpiles posted a surprisingly big increase, easing fears of a shortage of gasoline ahead of the northern hemisphere summer.
New York’s main contract tumbled 1.64 dollars to end at 50.22 dollars per barrel Wednesday, its lowest finish since February 18.
In London, Brent North Sea crude for May lost 1.50 dollars to 50.48 dollars.
Brent’s May contract expired on Thursday to be replaced by the June contract.
By Wednesday’s close, New York prices had slumped by nearly 14 per cent since supply worries pushed them to a historic high point of 58.28 dollars on April 4, the same day Brent crude rocketed to a record 57.65 dollars.
The catalyst for Wednesday’s slump was strong US inventories data.
Opec president Sheikh Ahmed Fahd al-Sabah had said on Monday that he believed the cartel would go ahead with a proposed output increase of 500,000 barrels per day (bpd) next month, despite the recent drop in prices.
His comments were reportedly echoed by oil kingpin Saudi Arabia on Tuesday.
Prices were hit also by an announcement that oil workers in Nigeria, Africa’s biggest oil producer, had decided not to strike.
The announcement of a “three-day warning strike” was due to have begun on Monday.
By Friday New York’s light sweet crude for May delivery slumped to 50.35 dollars per barrel from 53.45 the previous week.
In London, Brent North Sea crude for June delivery plunged to 51.41 dollars per barrel Friday from 53.84 dollars.
RUBBER: Rubber prices steadied after the end of the traditional low harvest period.
COCOA: Cocoa futures plummeted to a near three-month low point amid continued efforts to end civil war in major producer Ivory Coast.
COFFEE: Coffee prices hit their lowest level for two months on fund selling.
On New York’s CSCE market, Arabica for July delivery stood at 114.10 cents per pound on Friday, from 119.85 cents.
SUGAR: Sugar prices retreated to a seven-month low in New York, and a nine-month low in London, as speculative funds left the market.
“Sugar futures gave way under massive fund liquidation,” Prendergast said.
COTTON: Cotton prices lost ground due to technical selling.
“Cotton fell across the board on Wednesday” when a wave of automatic selling was triggered, Prendergast said.
New York’s July contract dropped to 53.35 cents per pound on Friday from 54.86 cents the previous week.
The Cotton Outlook Index of physical cotton stood at 55.85 cents on Thursday from 56.65 cents a week earlier.
WOOL: Wool prices steadied amid movements in the Australian dollar.
The price movements “closely followed the change in the US exchange rate,” the Australian Wool Industries Secretariat said.—AFP
