LONDON, Oct 27: Crude oil prices rocketed towards $100 a barrel this week on supply worries linked to fraught tensions in key crude producers and falling energy stockpiles in the United States.
OIL: World oil prices surged to historic highs Friday, breaching $92 for the first time in New York on rising tension in crude-rich Iran and tight US energy supplies.
Now that oil is in the 90s, it is much easier to reach $100, said Astmax fund manager Tetsu Emori.
Anything can happen in this market.New York’s main futures contract, light sweet crude soared to a record-high $92.22 per barrel. In London, Brent North Sea crude struck an all-time pinnacle of $89.30 per barrel.
Crude futures have rocketed by about $10 in only a month and by $30, or 50pc, in a year.Supply tightness and developments surrounding Iran remain the focus of attention, Sucden analyst Michael Davies said Friday.
The United States on Thursday escalated tensions over Iran’s nuclear drive and alleged backing for terrorism with a raft of new sanctions against the Islamic republic’s military and banks.
Iran denounced the sanctions as illegal and doomed to failure, but US Secretary of State Condoleezza Rice said Washington was well within its rights.
Sucden’s Davies meanwhile added that oil prices were winning support from a weak dollar, which makes commodities priced in the US currency cheaper for buyers using stronger units.
The dollar slumped to a record low against the euro on Friday after poor US economic data heightened expectations of a fresh cut to US interest rates next week, dealers said.
Emori added that oil prices were also being supported by Opec’s hesitance to increase production and rising tensions elsewhere in the Middle East.
Iraqi ministers held crisis talks Friday seeking to persuade an increasingly impatient Turkey against launching military strikes against rebel Kurd bases in northern Iraq, which is an oil-producing region.
The talks broke up after 90 minutes, however, and it was not immediately known if and when they would resume.
Another factor pushing up oil prices are tight energy supplies in the United States, the biggest consumer of energy.
The US Energy Information Administration said Wednesday that stockpiles of crude had plunged by 5.3 million barrels in the week ending October 19. The market had expected a gain of 960,000 barrels.
Inventories of US distillates, which include diesel and heating fuel, sank by 1.8 million barrels last week. That confounded market expectations for a rise of 275,000 barrels.
Heating fuel stocks are a key market focus because demand usually surges during the northern hemisphere winter. Compared with a year ago, distillates stocks are 7.6pc lower and crude reserves are down 5.9 per cent.
By Friday, Brent North Sea crude for December delivery leapt to $88.35 a barrel, from $83.87 a week earlier.
New York’s main oil futures contract, light sweet crude for delivery in December, soared to $91.10 a barrel, which compared with $88.59 for the November contract a week earlier.
PRECIOUS METALS: Prices mainly rose, with gold hitting the highest level since the start of 1980, on the back of the weak dollar and record high crude oil prices, traders said.
Precious metals were supported by the continued dollar weakness, the geopolitical environment and buoyant oil prices, said analysts at Barclays Capital.
Gold prices surged on Friday as high as $782.00 per ounce, which was last seen in January 1980.
Dollar-denominated commodities benefit from a weak US unit because it makes them cheaper for buyers using stronger currencies.
Meanwhile, soaring oil prices spark inflationary concerns, while gold is regarded as a haven in troubled times.
Platinum held close to last week’s record high of $1,460 per ounce as the white metal found support from dwindling stocks and fierce demand.
On the London Bullion Market, gold jumped to $779.15 an ounce at Friday’s late fixing, from $763 a week.
Silver climbed to $14.07 an ounce at Friday’s late fixing, from $13.83 a week earlier.
On the London Platinum and Palladium Market, platinum firmed to $1,454 an ounce at the late fixing Friday, from $1,452 a week earlier. Palladium was unchanged at $370 an ounce.
BASE METALS: Base metals prices mostly fell in the wake of poor data which pointed towards a slowing US economy.
Nevertheless, they remained underpinned by the likelihood of an interest rate cut from the US Federal Reserve, which could boost US demand for commodities.
Most analysts expect the Fed to cut rates by a quarter-point next Wednesday to 4.50 per cent.
Although bad US data confirms the (US economic) situation is bad at present, the fact that it may prompt the Fed to cut rates opens the window for another rebound in economic growth further down the road, said William Adams at BaseMetals.com.
On Friday, the price of copper for delivery in three months eased to $7,870 a ton on the London Metal Exchange, from $7,875 a week earlier.
SUGAR: Sugar prices rose as traders tracked supply problems in major exporter India.
The market has found support during the last week, partly as a result of the Indian crop being delayed, said Peter de Klerk, analyst at Czarnikow Group.
Sugar also found support from soaring crude oil prices, because sugar cane is used to produce ethanol, a cheaper biofuel alternative to gasoline or petrol.
By Friday on the LIFFE, the price per ton of white sugar for December delivery increased to 288.10 pounds, from 275.60 pounds a week earlier.
On the NYBOT, the price of unrefined sugar for March delivery rose to 10.47 US cents a pound, from 10.20 cents a week earlier.
GRAINS AND SOYA: Wheat prices fell, but maize was also driven higher by demand for biofuel production amid surging crude oil prices.
Wheat for December delivery fell to $8.07 a bushel, from $8.55 the previous week.
November-dated soyabean meal — used in animal feed — gained to $10.04, from $9.83.
On the LIFFE, the price per ton of wheat for May delivery stood at 162.50 pounds.
RUBBER: The price of rubber rose amid high oil prices and wet weather, which hampers output, analysts said.
The prevailing wet weather and high oil prices are expected to drive rubber prices upwards, said an official with a rubber production firm.
WOOL: The price of wool slid on profit-taking, while the strong Australian dollar made the commodity more expensive for buyers outside leading producer Australia.
The Australian dollar traded Friday at the highest level against the US currency, boosted by speculation that Australian interest rates would rise next month.
The Australian wool market finished 1.5pc lower on average, with the Eastern Index down 14 cents to close at 9.74 Australian dollars a kilo.—AFP