LONDON, March 23: Oil prices surged to new six-month high points above $25 a barrel this week, amid tight supply, resurgent demand and growing fears over the reliability of Gulf crude, given the US-Iraq stand-off.
May-dated Brent peaked at $25.58 a barrel on Thursday, while New York futures barrelled even higher as traders focused on the US economic recovery and concern over Iraqi supplies.
The US threat of military action against Baghdad has fuelled higher prices, as has the Israeli-Palestinian conflict, because of alarm that either event could spill over and affect vital crude supplies from the Gulf region.
Elsewhere, metals prices were generally weaker despite fair medium-term prospects given the strength evident in US economic data.
The gold price hugged a tight range, while among soft commodities, rubber prices soared because of supply fears.
OIL: Oil prices surged to six-month highs above $25 a barrel this week as hopes of a US economic recovery gave demand prospects a boost, while supply was seen threatened by fears of US action against Iraq.
By Friday afternoon a barrel of Brent North Sea crude for April delivery stood at $25.47 a barrel, flirting with levels not seen since the immediate aftermath of the September 11 attacks. The previous week, Brent was quoted at $24.47.
In New York, April-dated light sweet crude futures were quoted at $25.53 a barrel from $24.44 the previous week.
“There is a general perception of a fundamental improvement in the economy,” noted Deutsche Bank analyst Al Stanton. “People’s outlook in the second half is improving.
“On top of that, there is a war premium concerning the US emphasis on Iraq and what that would mean for the oil supply-demand balance,” he told AFP.
The fear is that any US military action against Baghdad could jeopardise supplies from Iraq, which currently exports up to two million barrels of oil a day.
Other suppliers in the Organization of Petroleum Exporting Countries (Opec) have promised to make good any shortfall in Iraqi supply, but analysts question how easy this will be.
GOLD: Gold prices bounced up this week as investment funds warmed to the precious metal again after a partial reversal of last month’s upsurge in prices.
By Friday afternoon, an ounce of bullion was fixed at $294.25, from $290.30 an ounce a week earlier.
Analysts said that though the market was quiet, it was being underpinned by firm demand from the Middle East and the Indian subcontinent.
“The market is positive for two main reasons,” noted Merlin Marr-Johnson, a metals expert with HSBC bank.” Supply is viewed as declining in the long term.
“On the demand side, the uncertainty about the financial situation is not over yet,” he added.
Fears over slumping assets such as stocks and currencies, particularly in Japan, were primarily responsible for a sharp jump in the gold price above $300 an ounce earlier this year.
SILVER: Silver prices settled slightly lower as lease rates eased after a period of volatility.
An ounce of silver was quoted at $4.5 on Friday afternoon from $4.62 the previous week.
“There is a general acknowledgement that the industrial recovery is under way and so consumer demand may pick up,” said Marr-Johnson. “On the other side, the market is awash with silver. The price is somewhere there in the middle.”
BASE METALS: Most base metals prices sank in the latter part of the week, primarily due to technical factors, as investors took profits following modest recent gains.
Positive economic data from the United States kept the overall tone firm, but some investment funds were anxious to reduce exposure after a recent wave of buying.
“We’re continuing to get positive economic data from the US and that is partly what the market has been responding to,” said Kevin Norrish, an analyst with Barclays Capital.
“What we’re seeing for the moment is a little bit of consolidation but if we continue to get good economic data, and that feeds into better demand, then that should result in some falls of the stocks on the LME (London Metals Exchange) which would be very supportive,” he told AFP.
Three-month copper prices stood at $1,643 a ton from $1,637 the previous week, while aluminium lost $33 a ton to $1,404. Nickel shed $100 to $6,560 a ton.
Among the other metals, zinc prices lost $1 to $838 a ton, but tin rose $90 to $3,950 a ton and lead was up 7.5 dollars at $494.
SUGAR: Sugar prices fell back this week, undermined by news of a stronger-than-expected harvest in Thailand.
On the CSCE in New York, a pound of unrefined sugar for May fell back to 5.78 cents from 6.28 cents the previous week.
On the LIFFE market in London, a ton of white sugar for May delivery fell to $207.10 on Thursday from $217.00 a week earlier.
“The Thais admitted that they had already surpassed their forecast” for cane crushing,” said Toby Cohen, an analyst with the Czarnikow brokerage. “That would mean they have more sugar available for exports.”
COTTON: Cotton prices rose again as signs of healthy demand continued to prop up the market.
In New York, the May contract inched up to 39.84 cents a pound on Thursday, from 38.84 cents the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, picked up to 42.05 cents from 41.90 cents.—AFP