LONDON, Aug 12: Crude oil prices fell off record peaks this week as traders seized on news of a failed plan to blow up US-bound passenger planes that prompted expectations of a drop in demand for jet fuel.
Coffee prices struck the highest level for six and a half years and nickel forged a new record.
British police revealed Thursday that they had foiled a plot to wreak “mass murder” with simultaneous mid-air explosions, triggering heightened airline security measures and rattling global financial markets.
However, James Moore, analyst for specialist website TheBullionDesk.com, cautioned that “it is worth noting that for all the disruptions, alerts and media coverage, no terror attack took place”.
On Friday, the Commodities Research Bureau's index of 17 commodities fell to 346.30 points, from 351.05 points the previous week.
GOLD: The price of gold -- which usually benefits from its safe-haven status in times in geopolitical instability -- fell despite news of the foiled bomb attack.
According to analysts, the downwards move was due to investors switching funds into US dollars amid plunging oil prices.
“Flight-to-safety dollar buying, coupled with long liquidation in the oil market, sent prices lower,” said Moore.
UBS analyst John Reade added: “Gold has failed to live up to its safe haven status, falling in the wake of a major terror alert and in sympathy with equities and other risk assets.”A stronger dollar makes dollar-denominated gold more expensive for buyers holding other currencies.
On the London Bullion Market, gold prices dropped to 644.50 dollars per ounce at Friday's late fixing, from 652.25 dollars a week earlier.
SILVER: Silver prices held firm in volatile trade.
Silver struck 12.69 dollars per ounce on Thursday -- the highest point since May 31 -- on news of the bomb plot, but has since pulled back slightly.
On the London Bullion Market, silver prices firmed to 12.27 dollars per ounce at Friday's fixing, from 11.20 dollars the previous week.
PALLADIUM AND PLATINUM: The sister metals stabilized. Platinum and palladium are taking the lead from gold in the absence of other external catalysts, said Barclays Capital analysts.
On the London Platinum and Palladium Market, platinum stood at $1,245 per ounce at the late fixing Friday, from $1,241 the previous week.
Palladium fell to $321 per ounce on Friday from $323 the previous week.
BASE METALS: Base metals prices shot higher, particularly copper and nickel which were lifted by falling global stocks and industrial action.
On Friday, nickel prices hit an all-time high of $27,300 per ton.
Nickel, a metal used to help prevent corrosion, was underpinned by news of a strike in major producer Canada.
Nickel hits a fresh high, supported by the low level of inventory and supply disruptions, highlighting supply constraints, Barclays Capital analysts said. The base metal's price has doubled since the start of 2006.
Copper prices climbed to 8,140 dollars per ton on Thursday, below the record of $8,800 set in May.
On Friday, three-month copper prices on the LME gained to $7,910 per ton from $7,740 the previous week.
Three-month aluminium prices rose to $2,564 per ton from $2,526.
Three-month nickel prices climbed to $27,200 per ton from $25,400.
Three-month lead prices advanced to $1,190 per ton from $1,085.
Three-month zinc prices increased to $3,430 per ton from $3,435.
Three-month tin prices gained to $8,450 per ton from $8,305.
OIL: London's Brent crude oil hit a record of $78.64 on Monday after British energy giant BP revealed it had begun to shut down Prudhoe Bay, the biggest oil field in the United States, due to a pipeline leak.
BP’s decision over Prudhoe Bay shook the oil market because the field accounts for eight per cent of total US production.
Prices found further support from Wednesday's news of heavier-than-expected falls in motor fuel stockpiles in the United States, alongside falling crude reserves. However on Thursday, crude futures slumped after British police said they had prevented a major bomb threat to US-bound aircraft.
The price falls came as BP said it was still producing 120,000 barrels of oil per day from the stricken 400,000-bpd Prudhoe Bay field, and hoped to keep some output operational.
Losses accelerated after Anglo-Dutch energy giant Royal Dutch Shell said it was resuming 173,000 barrels per day of crude output after plugging a pipeline leak in southern Nigeria.
News of the fixed pipeline meant that current Nigerian crude output has nonetheless been reduced by around 620,000 barrels per day, or 24 per cent of the country's total.—AFP
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