February 18, 2007	Sunday	Muharram 29, 1428

LONDON, Feb 17: World oil prices dropped in volatile trade this week, as the market focused on the health of energy stockpiles, particularly in the United States.

Base metals nickel and tin rose to record highs on supply shortages, while gold hit a seven-month peak owing to a weaker dollar.

Among soft commodities, cocoa also struck a seven-month high.

OIL: World oil prices fell from a week ago following some volatile trading.

Given that the end of the heating season is fast approaching and Saudi resistance to more robust (output) cuts, current inventory levels have the potential to force prices lower in the near-term, analysts at BMO Nesbitt Burns said.

Prices began the week by slumping more than two dollars in Monday's trade, in response to Saudi Arabian comments that appeared to pour cold water on further output cuts by the Opec cartel.

On Tuesday, crude futures staged a strong rebound after the International Energy Agency (IEA) raised its estimate for world oil demand this year, closing up more than a dollar in New York.

Then on Wednesday they tumbled again following a smaller-than-expected decline in stockpiles of US distillates.

Reserves of distillates, including heating fuel, fell by three million barrels to 133.3 million in the week ending February 9, according to the Department of Energy.

Analysts had expected a larger drop of four million barrels amid freezing weather in the United States, the world's biggest energy consumer.

The week saw also traders digest the latest Opec forecast regarding oil demand growth. The oil producing cartel said it was maintaining its estimate for the growth of oil demand in 2007 at 1.5 per cent, in line with its previous monthly report.

Elsewhere, a call by an extremist Al-Qaeda group for wider attacks against US oil suppliers forced Canada, Mexico and Venezuela to review security at oil installations. The market shrugged off the threat, however.

World oil prices rose on Friday after reports that militants were planning fresh attacks on Nigeria's oil-rich Niger Delta region, analysts said.

In London, the price of Brent North Sea crude for April delivery climbed 79 cents to 58.39 dollars per barrel in electronic deals.

New York's main oil futures contract, light sweet crude for delivery in March, gained 81 cents to 58.80 dollars per barrel in pit trading.

GOLD: Gold prices struck a peak of $671.94 per ounce on Wednesday, which was the highest level since mid-July 2006. The precious metal's gains were mostly eroded, however, owing to profit-taking.

Gold is “taking direction from the weaker dollar,” Moore said.

On the London Bullion Market, gold prices jumped to 665.10 dollars per ounce at Friday's late fixing, from 664.50 dollars the previous Friday.

SILVER: Silver prices climbed above $14.0 per ounce for the first time this year, after benefiting from the rise of its sister metal gold.

By reaching $14.104 per ounce, silver repeated the level struck in December, 2006. Silver gained also from strong performances among base metals, since as well as being used to make jewellery, silver is utilised by industry.

On the London Bullion Market, silver prices rose to $13.90 per ounce at Friday's late fixing, from 13.84 dollars the previous week.

PALLADIUM AND PLATINUM: The price of platinum reached the highest point since the end of November, 2006, before ending lower.

Platinum reached $1,217 per ounce on Wednesday -- last seen on November 22. Palladium ended higher, despite the metal's abundant stockpiles.

On the London Platinum and Palladium Market, platinum fell to $1,195 per ounce at the morning fixing Friday, from $1,196 the previous week. Palladium rose to $338 per ounce, from $336 one week earlier.

BASE METALS: Base metals prices rose strongly, led by nickel and tin which both struck record highs.

A ton of nickel for delivery in three months hit $39,501 on the London Metal Exchange (LME) Thursday -- the highest reading for nickel since the start of its quotation on the LME in 1979.

BNP Paribas analyst David Thurtell said nickel was supported by data showing the LME had stock of the metal equivalent to just half-a-day's global consumption.

No-one is prepared to sell it, in case of a production hitch, he said.

Nickel, which is used to help prevent corrosion, has seen its price soar by 160 per cent over the past year. Inventories of the metal on the LME have meanwhile dived by 90 per cent since February, 2006.

Elsewhere, a ton of tin for delivery in three months reached $13,300 on Friday, marking the highest price since 1989 when the metal was re-introduced on the London market.

The price of tin is surging owing to a drop in output from Indonesia, which is the world's second biggest producer of the base metal.

Indonesian company Koba Tin, the country's second biggest tin miner, has suspended deliveries of the metal amid an ongoing probe into unauthorized tin mining.

On Friday, three-month copper prices jumped to $5,820 per ton on the London Metal Exchange from $5,450 the previous week.

Three-month aluminium prices rose to $2,792 per ton from $2,680.

Three-month nickel prices surged to $38,900 per ton from $36,050.

Three-month lead prices gained to $1,780 per ton from $1,610.

Three-month zinc prices advanced to $3,385 per ton from $3,140.

Three-month tin prices rallied to $13,100 per ton from $12,255 a week earlier.

COFFEE: Coffee prices fell on profit-taking.

On Tuesday, Robusta-quality coffee slid to $1,508 per ton in London, the lowest point since January 10.

Arabica dropped to 115.65 US cents per pound in New York before expiration of the March contract. This price was last seen on November 3, 2006.

By Friday on LIFFE, London's futures exchange, Robusta quality for March delivery dropped to 1,533 dollars per ton on Friday, from $1,605 a week earlier.

On NYBOT, Arabica for May delivery (new contract) stood at 117 US cents per pound on Friday, from 115.10 cents the previous week.

COCOA: Cocoa prices hit a seven-month high for the second week in a row.

Supply concerns continue to support the market with arrivals in West Africa below last year's figures,” Sucden analyst Michael Davies said.

Dry weather in late 2006 and early 2007 has affected crop levels in Ivory Coast and Ghana, with less fresh cocoa entering the market.Prices struck 981 pounds per ton in London on Thursday -- the highest level since July 12.

By Friday on the LIFFE, the price of cocoa for March delivery rose to 962 pounds per ton, from 939 pounds a week earlier.

On the New York Board of Trade (NYBOT), the May contract expanded to $1,785 per ton on Friday, from 1,742 dollars the previous week.

SUGAR: Sugar prices rebounded in New York, aided by traders buying the commodity before expiry of the March contract.

A week earlier prices had dropped to the lowest point in four and a half months after the International Sugar Organization revised upwards its supply forecast for 2007.

By Friday on LIFFE, the price of a ton of white sugar for May delivery (new contract) slipped to 322.10 dollars, compared with $333.70 a week earlier.

On NYBOT, the price of unrefined sugar for May delivery (new contract) stood at 10.84 US cents per pound, from 10.36 US cents the previous week.

GRAINS AND SOYA: Grains and soya prices advanced in Chicago, supported by demand for biofuels. Wheat meanwhile fell owing to favourable harvest conditions in the northern hemisphere.

Speculative interests continue to support the grains based on the big global demand for ethanol and biodiesel,” Allendale analyst Joe Victor said.

There is a global interest in wanting to own grains because of their usage in the fuel sector.On the Chicago Board of Trade, the price of wheat for March delivery fell to US$4.54 per bushel on Friday, from 4.57 dollars the previous week.

Maize for March delivery rose to $4.08 per bushel on Friday, from $3.99 the previous week.

March-dated soyabean meal -- used in animal feed -- gained to $7.58 on Friday, from $7.43 the previous week.

On the LIFFE, the price of a ton of wheat for May (new contract) delivery rose to 94.50 pounds, from 92.60 pounds the previous week.—AFP