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World oil prices have risen to recent records, as traders tracked Middle East tensions and the weak US dollar, and warned of crude striking $100 per barrel. New York’s main futures contract, light sweet crude for delivery in November, rose $1.49 to $88.89 a barrel after hitting a historic $89 a day earlier.
On October 19, oil price hits record high of $90.07 amid global supply jitters and tensions between Turkey and crude producers, Iraq.
New York’s main futures contract, light sweet crude for delivery in November, touched $90.07 per barrel in early afternoon deals. That beat the previous high of $90.02 set late on October 18. The contract later retreated to stand at $88.59, down 88 cents from October18 close.
Last week, oil rose to record highs as traders seized on simmering tension along the Turkey-Iraq border. Prices also won support from the weak US dollar, which makes dollar-priced commodities cheaper for buyers with stronger currencies and, therefore, lifts crude demand. The euro hit a record high $1.4310 earlier on October 18.
The issue seems no longer to be whether oil will reach $100 per barrel, but when, said Barclays Capital analyst Kevin Norrish.
The price of Brent oil has leapt by more than 10 per cent in the last eight trading days, while New York crude has rocketed by about 12.5 per cent in value. Traders are also jittery about tight global energy supplies, particularly during the northern hemisphere winter when demand surges for heating fuel.
However, the US Department of Energy said that American crude reserves jumped 1.8 million barrels last week. Stockpiles of distillates, which include diesel and heating oils, leapt by one million barrels. The prospect of lower US interest rates, which could increase global crude demand by stimulating the world’s biggest economy and energy consumer, has also supported gains.
Meanwhile, the International Energy Agency (IEA), the developed world’s energy watchdog, this week held steady its forecasts for oil demand for this year and next. The IEA predicted average oil demand to be 85.9 million barrels per day in 2007 and 88 million barrels per day in 2008.
Gold
Gold prices have risen to near 28 year highs, gaining strength as US dollar weakens. The European single currency bounced back about $1.42, rising close to its record high $1.4283 that was struck on October 1. The precious metal is also supported by strong crude oil prices, which in turn spark inflationary concerns. However, gold is regarded as a safe bet in times of rising inflation.
A weaker dollar makes dollar dominated metals cheaper for holders of other currencies. The gold market has witnessed an impressive rally, surging 20 per cent in the past two months.
Gold, traditionally seen as a safe-heaven is also expected to get support from tensions in the Middle East. Turkish lawmakers called for a military operation in northern Iraq to crush Kurdish rebels hiding there as Iraqi leaders stepped up a diplomatic offensive to avert any attack.
Gold spiked to a record high of $850 in January 1980 when investors bought the metal heavily on high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution.
In the physical market, gold jewellery exports from Turkey, one of the top three exporters, rose 21.6 per cent year-on-year to 71.4 tonnes in the first nine months of the year. Exports in September were up by 14.5 per cent to 9.6 tonnes.
Platinum
Price of platinum forged a record high on October 11, as the white metal was hit by tight global supplies, while gold soared to the best level since 1980 on the back of the week US dollar.
Platinum surged as high as $1,417.25 an ounce on the London Platinum and Palladium Market. That beat its previous all-time high point of $1,402.50 hit in November 2006.
Platinum is used by the jewellery industry and in the manufacture of catalytic exhaust units for vehicles. Gold prices leapt on October 18 as high as $753.65 an ounce on the London Bullion Market. Platinum, already beset with tight supplies, took another hit from fresh concerns in South Africa. The rise in platinum prices has been supported by concerns over supply following news of electrical power shortages in South Africa – the world’s largest producer of platinum.
The power supply to smelters owned by Anglo Platinum was disrupted and reignited fears that the power situation could worsen over the next few years.
Lead
The price of lead struck yet another all-time high point on October 12 owing to persistent jitters over stretched global supplies and fierce demand, traders said.
The price of lead for delivery in three months rose to an historic $3,866 a tonne on the London Metal Exchange. In our view, strong demand in Asia and supply shortages will continue to support the rally higher, said analyst at Barclays Capital.
