On October 26, oil prices rose toward $63 a barrel, on concern about heating fuel supplied ahead of the northern hemisphere winter. Consumers will have to pay more as crude prices remain stubbornly about $60. The US light crude has not ended a day below $60 since the end of July.
The US distillate stocks, including heating oil and diesel, fell by 1.6 million barrels last week. Distillate stocks, which include diesel fuel, jet fuel and heating oil, dropped 1.6 million barrels to 121.1 million barrels because of strong demand and slow recovery from recent hurricanes. Industry analysts had forecast a gain of 1.9 million barrels.
The US crude and petrol inventories, however, raised more than expected on increased oil imports. Crude oil stockpiles rose 4.4 million barrels, far higher than analyst forecasts of 1.9 million barrels. The gasoline demand in the past four weeks is averaging 2 per cent less than those four weeks last year.
A few days earlier, crude prices had fallen as worries about disruption to oil production eased after Hurricane Wilma veered away from the Gulf of Mexico region, where many US oil production and refinery facilities are located.
After devastating Mexico’s Yucatan peninsula at the weekend and hitting southwest Florida, Wilma spared oil and gas output facilities in the US Gulf Coast. The market had feared Wilma would delay the recovery in oil output severely disrupted by earlier hurricanes.
Four refineries are still completely shut in the US in the aftermath of hurricanes Katrina and Rita. In addition, bad weather and several sabotage blasts have hindered oil exports in Iraq and the strike at Total’s biggest French refinery has resulted in the loss of eight million barrels of oil product output. Total said however, that its biggest plant in France would be operating fully again in a week.
Algeria’s Energy and Mines Minister Chakib Khelil said that oil prices were expected to stay above $50 a barrel for the next six months due to limited refinery capacity and increased demand due to by economic growth.
The WTI prices have fallen 16 per cent from the record $70.85 a barrel of August 30. They are, however, still at very high levels historically, pushing American demand for oil products down by 3.2 per cent on the year during the last month, according to the US government.
Gold
In the London market, gold rebounded on October 25 to break back through $470 a troy ounce on the dollar’s weakness and buying by investment funds. The precious metal was also boosted by rising crude oil prices, and by reaction to the nomination of Ben Bernanke to succeed Alan Greenspan as chairman of the Federal Reserves.
Gold climbed $7 to $472.40/473.20 a troy ounce on October 25 London trade, from its late quote in New York on October 24. Bullion has bounced more than $10 in the past three sessions, indicating support for the metal at $460. But it remains off the near-18-year high of $480.25 hit two week ago.
The commodity has rallied in the fourth quarter of every year since 2001, thanks to increasing jewellery demand ahead of the Indian festival season, RBC capital said in a note. Demand is currently suppressed because of high prices but remains as an implicit force in the market, RBC said.
Analysts said the nomination of Mr. Bernanke was a positive for gold, due to comments the former Federal Reserve member made two years ago that the Fed would “drop money from helicopters if necessary” to counteract the threat of deflation.
Gold is seen as a safe haven amid high inflation, while a weaker US currency traditionally leads to a rise in the metal’s price.
Meanwhile, gold’s sister metal, silver reached $7.86 per ounce on October 24 fixing, the highest level since December 7, 2004, but later fell on profit taking. Silver prices dipped after reaching the highest level for almost a year, taking a lead from record high copper futures.
Copper
Copper prices have risen in recent days to above $4000 per ton for the first time on strong Chinese demand. On October 20, three month copper prices on the London Metal Exchange hit $4,015 per ton – the highest price for the metal since it was first quoted in its current form in 1870. Copper futures in London have jumped by around 27 per cent since the start of 2005.
China, accounting for some 22 per cent of global copper demand, saw its economy maintained brisk growth in the first three quarters of 2005, expanding at 9.4 per cent with investment still strong and exports booming, official data showed.
