LONDON: Brent oil prices jumped this week to the highest level so far this year, as the latest Saudi-led air strikes on Yemen stoked supply tensions in the crude-rich Middle East.

Elsewhere, precious metal gold sank on sliding safe-haven demand as a result of easing tensions over Greece.

OIL: Brent prices on Friday hit a four-month peak of $65.80 per barrel, the highest level since December 10, as Saudi-led coalition warplanes again hit Yemen.

“Saudi Arabia’s renewed bombing campaign in Yemen sent crude oil higher, with Brent rising to new 2015 highs,” said CMC Markets analyst Jasper Lawler.

The Saudi-led coalition launched more deadly strikes in Yemen Thursday despite a demand by Iran-backed rebels for a complete halt to the raids as a condition for UN-sponsored peace talks.

The new wave of strikes killed at least 23 rebels as the World Health Organisation said the overall death toll from fighting since late March topped 1,000.

“Crude oil prices rebounded to reach four-month highs following news that Saudi Arabia renewed its aerial assault in Yemen to target the Shiite rebels,” added senior energy analyst Myrto Sokou at the Sucden brokerage in London.

Yemen is not a major oil-producing country, but its coast forms one side of the Bab el-Mandeb Strait, the key strategic entry point into the Red Sea through which some 4.7 million barrels of oil pass each day on ships headed to or from the Suez Canal.

The Saudi-led coalition declared Tuesday that the first phase of its operations against the Huthis and their allies was over, but there has been no end to its strikes.

Crude futures had fallen Wednesday after weekly US petroleum data showed higher crude inventories but marginally lower production.

US commercial crude reserves in the period ending April 17 rose for the 15th straight week, adding 5.3 million barrels, the Department of Energy said.

It added that the increase lifts US oil supplies to the highest level on record.

However, production slipped by 18,000 barrels a day, following a 20,000 barrel drop in the previous week.

Dealers are hoping a slowdown in US shale output could alleviate a global crude oversupply, which led to a collapse in prices of more than 50 percent between June and January.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June rallied to $65.21 a barrel from $64 the previous week.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for June leapt to $57.22 compared with $56.12 for the May contract the previous week.

PRECIOUS METALS: Gold fell in value as investors eyed receding worries over Athens.

The metal — regarded by investors as a safe bet in times of turmoil — rose the previous week on uncertainty over a potential Greek eurozone exit.

“Precious metals struggled in the absence of safe-haven demand, as the Greek crisis simmered away without yet boiling over,” said Capital Economics analyst Julian Jessop on Friday.

Nevertheless, European ministers heaped pressure on Greece Friday to speed up negotiations to unblock critically needed bailout funds and avert a dangerous default, showing frustration after months of bogged down talks.

Athens is fast running out of money to both pay its creditors and carry out everyday government, raising the risk of a default as a long series of huge loan repayments to the International Monetary Fund and the European Central Bank approach.

“The risk related to Greece has retreated somewhat,” said Saxo Bank anlayst Ole Hansen.

By Friday on the London Bullion Market, the price of gold slid to $1,183 an ounce from $1,203.35 the previous week.

Silver declined to $15.83 an ounce from $16.36.

On the London Platinum and Palladium Market, platinum dipped to $1,128 an ounce from $1,161.

Palladium eased to $774 an ounce from $777.

BASE METALS: Base or industrial metals faced a mixed trading week as traders balanced supply worries against Chinese demand fears.

By Friday on the London Metal Exchange, copper for delivery in three months fell to $6,040 a tonne from $6,079 the previous week.

Three-month aluminium slid to $1,821 a tonne from $1,837. Three-month lead increased to $2,073 a tonne from $2,043.50. Three-month tin advanced to $15,765 a tonne from $15,100. Three-month nickel increased to $13,025 a tonne from $12,745. Three-month zinc edged higher to $2,249 a tonne from $2,223.

SUGAR: Prices weakened on worries Brazil’s current output levels would add to a supply glut.

“Ideas that Brazil production that is being harvested now will be more than enough to keep an oversupplied market with plenty of sugar was negative,” noted Price Futures Group analyst Jack Scoville.

By Friday on LIFFE, London’s futures exchange, a tonne of white sugar for delivery in August fell to $370.80 from $375.10 a week earlier.

On ICE Futures US, unrefined sugar for July decreased to 13.06 US cents a pound from 13.22 US cents.

COCOA: Futures ran out of steam as traders eyed slowing demand, and after solid gains the previous week.

“We suspect that the recent slowdown in emerging economies is curbing the growth in demand for luxury items such as chocolate, as consumers become increasingly income and price-conscious,” said Capital Economics analysts.

“Nevertheless, rising incomes in developing countries should remain a positive driver of demand over the coming years as the middle-income population increases.”

By Friday on LIFFE, cocoa for delivery in July dipped to 1,961 pounds a tonne from 1,979 pounds the previous week. On the ICE Futures US exchange, cocoa for July slid to $2,846 a tonne from $2,875.

COFFEE: Prices drifted lower as supply outpaced demand, dealers said.

By Friday on ICE Futures, Arabica for delivery in July fell to 141.85 US cents a pound from 142.55 cents the previous week.

On LIFFE, Robusta for July reversed to $1,820 a tonne from $1,832.

RUBBER: Prices edged higher in subdued trade.

By Friday, the Malaysian Rubber Board’s benchmark SMR20 rose to 141.20 US cents a kilo from 139.85 US cents a week earlier.

Published in Dawn, April 26th, 2015

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