LONDON, Sept 3: Oil prices rocketed to all-time peaks this week, touching $70.85 in New York on supply concerns as Hurricane Katrina tore through oil rigs and refineries in the Gulf of Mexico, severely disrupting US energy production.
Katrina’s devastation weighed heavily on the dollar, in turn lifting precious metals prices. The hurricane affected also soft commodities, with coffee futures rising strongly owing to more than a million bags of beans left stranded in warehouses.
The hurricane, described as the worst natural disaster ever to hit the United States, struck the US Gulf Coast states of Louisiana, Mississippi and Alabama on Monday, reportedly leaving thousands of people dead.
The Commodities Research Bureau’s index of 17 commodities climbed to 337.18 points on Friday — the highest level since November 1980 — from 319.04 points the previous week.
GOLD: Gold prices rebounded as the dollar slumped to a three-month low point against the euro with Hurricane Katrina threatening to cripple growth in the United States, the world’s richest economy.
The key driver behind this rally has been mainly the dollar weakness and expectations of a slowdown in Fed tightening, not inflationary concerns arising from high oil prices, Barclays Capital precious metals analyst Yingxi Yu said.
A meeting between US President George W. Bush and Federal Reserve chairman Alan Greenspan on Thursday had fuelled talk that Katrina might bring about an early end to the cycle of hikes in US interest rates to the current 3.50 per cent.
The European single currency rose to 1.2589 dollars in European trading on Friday — the highest level since May 27, when it was lifted by the French and Dutch rejections of the European constitution.
A weaker dollar traditionally makes gold, which is priced in the US currency on world markets, more attractive to buyers using other currencies.
On the London Bullion Market, gold prices climbed to $443.60 per ounce at the late fixing on Friday from $438.85 the previous week.
SILVER: Silver prices advanced in the wake of sister metal gold and after plunging to the lowest level for seven months the previous week.
“Bouncing back strongly from its recent bout of selling, silver has breached the key psychological level of 7.00 dollars on the back of gold,” Yingxi Yu said.
Prices had slumped to 6.845 dollars on August 26, the lowest point since February 10, on further evidence that the boom in digital photography has slashed demand for developing traditional camera films — a process that relies on the use of silver.
On the London Bullion Market, silver prices rose to 7.020 dollars per ounce at the late fixing Friday from 6.845 dollars the previous week.
PLATINUM AND PALLADIUM: Platinum and palladium prices gained owing to the dollar’s woes.
“The platinum group metals are also higher due to no obvious reasons other than a weaker dollar, which is overshadowing any negative impact on prices from the decline in US August auto sales from Julys 20.9 million to 16.8 million,” Yingxi Yu said.
By Friday, platinum prices rose to 905 dollars per ounce on the London Platinum and Palladium Market from 894 dollars the previous week.
Palladium prices stood at 184 dollars per ounce on Friday from 183.50 dollars.
BASE METALS: Base metals prices advanced, led by copper reaching yet another historic high point on the dollar’s decline and a fresh fall in stockpiles.
Copper inventories slid in London and Shanghai this week, “firmly supporting higher prices”, Barclays Capital base metals analyst Ingrid Sternby said.
Copper futures reached a record high 3,700 dollars per tonne in London trading on Friday.
By Friday, three-month copper prices jumped to 3,692 dollars per tonne on the London Metal Exchange from 3,608 dollars the previous week.
Three-month aluminium prices firmed to 1,893.50 dollars per tonne Friday from 1,893 dollars.
Three-month nickel prices grew to 15,325 dollars per tonne on Friday from 14,860 dollars.
Three-month lead prices rose to 895.50 dollars per tonne Friday from 875 dollars.
Three-month zinc prices advanced to 1,429 dollars per tonne Friday from 1,362 dollars.
Three-month tin prices stood at 7,065 dollars per tonne Friday from 7,200 dollars.
OIL: Oil prices surged to a new record high of 70.85 dollars per barrel in New York on Tuesday, a day after Hurricane Katrina ravaged crude production and disrupted refineries in the southern United States.
New York’s main contract, light sweet crude for delivery in October, soared by 3.65 dollars to reach the all-time high, beating the previous record 70.80 dollars reached Monday.
The price of Brent North Sea crude oil for delivery in October meanwhile rocketed by 4.02 dollars to strike a record peak of 68.89 dollars on Tuesday.
Prices took a breather on Wednesday after the US government said it would release oil from its Strategic Petroleum Reserve to help refineries left short of crude after Katrina battered platforms.
But prices resumed their march a day later amid concern that refineries would anyway be unable to turn the extra crude into petrol or heating fuel owing to their own technical difficulties.
US motorists’ organizations have reported panic buying and shortages at petrol stations, with nine major refineries on the Gulf Coast shut down by Katrina and pipelines from the south operating at sharply reduced capacity.
According to US government data, the hurricane has shut down an estimated 90 percent of crude production and 79 percent of natural gas output in the Gulf of Mexico — which accounts for a quarter of total US oil output.
Ending a roller-coaster week, prices fell strongly on Friday as a number of energy groups began increasing operations after the damage caused by Katrina.
Traders reacted also to news that the International Energy Agency is to call on its member states to release 60 million barrels of oil from their strategic reserves for a month to counter fuel disruptions.
The French industry ministry, which revealed the IEA’s plans, added that France would contribute 4.6 percent of its reserves to the market.
By Friday, New York’s light sweet crude for October delivery rose to 67.75 dollars per barrel from 67.50 dollars the previous week.
In London, Brent North Sea crude for October delivery climbed to 66.39 dollars per barrel from 66.04 dollars.
RUBBER: Rubber made strong gains this week as Hurricane Katrina severely disrupted supplies of the commodity in the southern United States.
“All the markets have made gains, and the main reason unfortunately is because of the crisis in New Orleans,” said Rachid Ahmed, a trader at Corrie Maccoll.
“We’re not sure how much, but there is quantity of rubber that is shipped and stored in the ports near New Orleans, and that must have been affected, one way or another.
“Mainly the distribution will be affected, even if the rubber may not be destroyed, which caused a panic wave of buying in the States to cover the shortfall,” he added.
On TOCOM, Tokyo’s commodity exchange, natural rubber for October delivery shot up to 180.60 yen on Friday, from 171.40 yen a week earlier.
Singapore’s RSS 3 October contract gained to 167.50 US cents on Friday, from 154.75 cents.
COCOA: Cocoa prices increased amid speculative buying and a tense political backdrop in Ivory Coast, the world’s top producer.
“Unease remains a provocation for higher prices, despite expectations of a good crop in 2005/2006,” noted Ann Prendergast, analyst at the Refco brokerage.
Ivory Coast, in west Africa, has been split in two since a failed coup against President Laurent Gbagbo in September 2002, pitting rebels from the Muslim-dominated north against the Christian-populated south.
On LIFFE, London’s futures exchange, the price of cocoa for December delivery rose to 877 pounds per tonne on Friday from 824 pounds a week earlier.
On the CSCE, the New York futures market, the December contract forged upwards to 1,539 dollars per tonne on Friday, from 1,412 dollars.
COFFEE: Coffee prices leapt on mounting fears that Hurricane Katrina may have destroyed massive US coffee stockpiles.
Coffee futures “jumped on continued concern about the effects of Katrina and damage to US stocks”, Prendergast said.
“Most traders have written off all of the 1.6 million bags of coffee stored in New Orleans warehouses, though there has been no official count.”
She added that dollar weakness stimulated interest in both markets, which are jittery about the extent of damage.
On LIFFE, Robusta quality for November delivery surged to 1,016 dollars per tonne on Friday from 954 dollars a week earlier.
On New York’s CSCE market, Arabica for December delivery soared to 103.90 US cents per pound on Friday, from 96.30 cents.
SUGAR: Sugar prices pushed higher on strong Iraqi demand and concerns over sugar refining capacity.
“Demand from Iraq is underpinning demand,” said Prendergast, adding that the country has formally offered to buy 100,000 tonnes of white Brazilian sugar.
“The market is supported by tight available deliverable supplies of refined sugar,” she said.
By Friday on LIFFE, the price of a tonne of white sugar for October delivery rose to 309 dollars from 300.20 dollars a week earlier.
On the CSCE in New York, a pound of unrefined sugar for October delivery stood at 10.07 US cents on Friday from 9.75 cents.
GRAINS AND SOYA: Grains and soya prices mainly fell as supply fears relented over Katrina in major producer United States.
According to Jason Roose, of US Commodities, Katrina had put the market “under pressure” earlier in the week. However prices regained ground as it became clear that exports were largely unaffected.
On LIFFE, wheat for November delivery firmed to 67.50 pounds per tonne on Friday from 67 pounds a week earlier.
In Chicago, the price of wheat for September delivery dropped to 306 US cents per bushel Friday from 312.75 cents.
Maize for September delivery eased to 204.50 cents per bushel on Friday from 205.25 cents.
Soyabeans for September delivery fell to 589 cents per bushel on Friday from 591 cents.
September-dated soyabean meal — used in animal feed — stood at 182.80 dollars per tonne from 184.50 dollars.
COTTON: Cotton prices moved upwards amid uncertainty over Katrina’s impact on the US harvest.
“Traders are still waiting to hear how much damage was caused by the storm, and early estimates suggest up to 500,000 bales were damaged or lost,” Prendergast said.
New York’s December contract rose to 49.45 US cents per pound on Friday from 48.25 cents the previous week.
The Cotton Outlook Index of physical cotton stood at 53.35 cents on Thursday from 53.20 cents a week earlier.
WOOL: Wool prices eased, while Chinese buying remained key.
“The Australian Wool Market finished this week with prices 0.9-percent lower on average,” the Australian Wool Industries Secretariat said.
“As is the norm, buying for China dominated sales this week.”
The Australian Eastern index dipped to 6.92 Australian dollars per kilo on Thursday, from 6.98 dollars last Thursday.
The British Wooltops index was unchanged at 412 pence on Thursday from the previous week.—AFP
