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Oil prices have risen because of concerns about US energy supplies and uncertainty about the possible war in Iraq. A US Department of Energy weekly report said that crude oil stocks had fallen by 500,000 barrels, or 0.2 per cent, to 273.3 million in the week to January 24 from the previous week. Although that was a smaller fall than the market had expected, traders were shocked by a reported slump of 6.8 million barrels in distillate fuels stocks to 122.4 million and a fall of 3.3 million barrels in gasoline stocks to 213 million.
But a possible delay to military action against Iraq acted as a drag on prices as the US and Europe prepared for a showdown in Nato that could delay military action. France, Belgium and Germany on February 10 blocked proposals in Nato to start planning the deployment of surveillance aircraft, Patriot missiles and troops to Turkey, arguing that the moves could undermine diplomatic efforts to avert a conflict.
In London, on February 11, IPE front month Brent was 24 cents lower at $32.10 a barrel, having earlier hit a 26-month high of $32.70. According to an Opec production survey published by Platts on February 10, the cartel’s output rose by 500,000 barrels per day in January. Saudi Arabia produced an additional 450,000 bpd in order to compensate for the shortage in Venezuelan supplies as a result of the two-month long strike.
Venezuelan production, which ran at 2.9 million bpd in November, averaged 1 million bpd in December and fell to 650,000 barrel per day in January. Excluding Iraq, which exports oil under the UN oil-for-food programme, the 10 Opec members with crude output quotas managed to boost their combined output from 22.85 million bpd in December to 23.21 million bpd. This fell below the new 24.5 million bpd ceiling that came into effect at the beginning of February.
Gold prices rose to six-year high towards the end of January, as safe haven flows continued to boost the value of the precious metal amid concerns about the potential economic fall out of a war in Iraq. By January 31, an ounce of the precious metal was fixed at $367.50 per ounce, against $366 the previous week.
Earlier in the week, gold prices have risen above $370 an ounce, ahead of an anxiously awaited report by the United Nations weapons inspectors to the UN Security Council on their findings in Iraq.
A weaker dollar also lent support to gold prices, making the precious metal, which is priced in dollars on world markets, more attractive to investors in Europe and Asia. But prices later eased back on signs the UN would not be authorizing the imminent use of force in Iraq, though worries the United States might launch unilateral action lingered.
Meanwhile, platinum prices rose to new 17-year highs after comments from the US President when he suggested that fuel cell technology, which is largely platinum based, could become a priority for the US administration, analysts said.
Cocoa futures rallied as traders fretted about supplies from the Ivory Coast, where violence erupted again despite a French-brokered peace deal aimed at ending a four-month war in the world’s biggest cocoa producer.
On LIFFE, London’s financial futures exchange, the price of cocoa for May delivery rose to 1,463 pounds a ton from 1,396 pounds the previous week. On the CSCE, the New York futures market, the May contract climbed to $2,333 per ton from $2,196. Man Financial analyst Andy Holt said the price rise was “entirely due” to events in the Ivory Coast.
Cocoa prices have endured a volatile run since the uprising began in September, hitting 17-year highs in mid-October before easing back.
