June 22, 2008	Sunday	Jamadi-us-Sani 17, 1429

LONDON, June 21: Oil prices raced to all-time highs of almost $140 a barrel this week despite Saudi plans to increase output.

A weak US currency pushed up demand for crude and metals as they became cheaper for foreign buyers, traders said.

OIL: Crude prices reached historic peaks on Monday despite UN Secretary General Ban Ki-moon announcing that Saudi Arabia would increase its oil output by 200,000 barrels per day (bpd) in July.

Saudi Arabia, the world’s biggest exporter of oil, confirmed Thursday that it intended to raise output, but did not specify when the extra production would come on line.

The Saudi announcement came ahead of a high-level meeting between consumers and producers that the kingdom is hosting on Sunday in its city Jeddah, to discuss rocketing fuel costs which are pushing up inflation and dampening economic growth for countries worldwide.

The current proposed (production) increase is set to lift Saudi’s output to 9.7 million barrels per day in July, the highest monthly rate since August 1981, said Kevin Norrish, an oil analyst at Barclays Capital.

However, in our view, the move does not seem to be enough to reverse the recent strength in prices, as it does little to repeal the longer-term expectations for tight demand-supply balances. New York’s main oil futures contract, light sweet crude for July delivery, struck a record high of $139.89 a barrel on Monday. The same day, Brent North Sea crude for August reached a historic $139.32.

After hitting new heights, oil prices fell heavily on Thursday as Saudi Arabia confirmed plans to increase output. They were also pushed lower as China fuelled expectations of a drop in demand after hiking domestic energy prices.

Ending a volatile week’s trade, oil prices shot back up on Friday as Anglo-Dutch oil giant Shell declared force majeure on 225,000 bpd for June and July deliveries from its offshore Bonga oilfield in Nigeria, following an attack by militants.

Force majeure is a legal clause allowing producers to miss contracted deliveries because of circumstances beyond their control.

Thursday’s attack was carried out by the Movement for the Emancipation of the Niger Delta (MEND) -- the best equipped and most organised of the armed groups operating in the Niger Delta.

It forced Shell to halt production on the site.

Nigeria was until recently Africa’s largest oil producer but was overtaken in April by Angola, according to Organisation of Petroleum Exporting Countries (Opec) figures.

Angola produced 1.873 million bpd on average in April, trumping the 1.818 million bpd produced by Nigeria.

By Friday, New York’s main oil futures contract, light sweet crude for July rose to $134.56 a barrel from $133.74 a week earlier.

Brent North Sea crude for delivery in August climbed to $134.61 from $133.75.

PRECIOUS METALS: Precious metals prices benefited from a weak dollar.

The market remains sensitive to currency movements and will be an ongoing theme given the historic correlation between gold and the dollar, said James Moore of TheBullionDesk.com.

On the London Bullion Market, gold advanced to $907.50 per ounce at Friday’s late fixing from $866 a week earlier.

Silver increased to $17.74 per ounce from $16.31.

On the London Platinum and Palladium Market, platinum climbed to $2,068 per ounce at the late fixing on Friday from $2,043 a week earlier.

Palladium rallied to $475 ars per ounce from $450.

BASE METALS: Base metals prices mostly rose, while traders eyed developments on the oil market.

For the base metals the question is whether an oil price retreat will be seen as bullish (price supportive), said BaseMetals.com analyst William Adams.

On the one hand a pull back in oil might lead to more liquidation selling across commodity baskets, but lower oil prices should help the global economy and therefore be good for metal demand. By Friday, copper for delivery in three months jumped to $8,330 per ton on the London Metal Exchange from $7,980 a week earlier.

Three-month aluminium increased to $3,073 per ton from $2,945.

Three-month lead climbed to $1,811 per ton from $1,775.

Three-month zinc grew to $1,934 per ton from $1,900.

Three-month tin gained to $22,400 per ton from $21,000.

Three-month nickel dropped to $22,200 per ton from $24,000.

COCOA: Cocoa prices struck a 28-year high for a second week running in New York, lifted by the prospect of a weak harvest in top global producer Ivory Coast.

New York cocoa soared as high as $3,122 a ton, which was last seen in March 1980.By Friday on LIFFE, London’s futures exchange, the price of cocoa for September delivery rose to 1,648 pounds per ton from 1,615 pounds a week earlier.

On the New York Board of Trade (NYBOT), the September cocoa contract rallied to $3,086 per ton from $3,003.

COFFEE: Coffee prices rebounded.

By Friday on LIFFE, Robusta for September delivery gained to $2,268 per ton from $2,200 a week earlier.

On the NYBOT, Arabica for September delivery advanced to 140.45 US cents per pound from 134.30 cents.

SUGAR: Sugar prices extended gains, lifted by soaring oil prices. The raw material is used in the production of ethanol, which is an alternative to motor fuel.

By Friday on LIFFE, the price per ton of white sugar for August delivery climbed to 378.10 pounds from 363 pounds the previous week.

On NYBOT, the price of unrefined sugar for October delivery increased to 12.81 US cents per pound from 10.61 cents.

GRAINS AND SOYA: Grains prices firmed and soya steadied this week as investors tracked weather conditions in the US Midwest where the commodities are grown.

By Friday on the Chicago Board of Trade, maize for July delivery rose to $7.32 per bushel from $7.31 the previous week.

July-dated soyabean meal — used in animal feed — eased to $15.59 from $15.60.

Wheat for July delivery grew to $8.92 per bushel from $8.82.—AFP