In the week ended August 24-25, oil futures ended the week firm. On August 20, New York’s Nymex September contract hit a 15- month high of more than $30 a barrel before its expiry at the end of the day.
Oil futures remained supported by the possibility of a US attack on Iraq. On August 20, there was a surprise on the US crude inventories. Previous week the American Petroleum Institute (API) reported a dramatic 9.5 million barrel slump in the US crude supplies. This had pushed prices higher. On August 20 the API data showed a 6.6 million barrel jump the opposite direction for the week to August 16.
The increase was unexpected, but analysts pointed out that the overall downward trend in the US inventories was continuing. The US Department of Energy released its revisions of the US oil demand for June during the week. It changed its estimate of oil demand for the second quarter from a year-on-year fall of 0. l per cent to an increase of 0.2 per cent.
On August 22, the price of Opec crude stood at $26.78 per barrel. Oil futures prices in London and New York have rallied sharply in the past week on war tensions, and concerns over the tight US inventories of crude oil. Those market jitters were heightened following the reports that some Saudis, disenchanted with the US criticism of the Kingdom, have withdrawn funds from the US.
Traders were on alert for fresh clues on the likelihood and timing of any action against Baghdad.
But analysts said the market appeared certain action against Iraq was on the horizon. “With the threat of war hanging over the market, companies are reluctant to let industry stock levels fall in case they cannot replace them and some governments are actively building up strategic stocks, boosting the value of oil that is already in storage,” the Centre for Global Energy Studies said.
Cocoa prices have risen in recent days, as a dearth of supply kept the market well supported.
On Liffe London’s financial futures exchange, the price of cocoa for December delivery rose to pound 1414 a tonne on August 22 from pound 1348 the previous week.
On the CSCE, the New York futures market, the September contract climbed to $1958 a tonne from $1884. Indonesia plans to become the world’s largest supplier of quality cocoa beans and aims to boost output to 1.5 million tonnes by 2010, the Indonesian Cocoa Association (Askindo) said. Indonesia is expected to produce about 400,000 tonnes of beans in 2002, up from 380,000 tonnes in 2001.
Coffee prices stagnated in London in the third week of August in a market depressed by excess supply and the prospect of a record harvest from Brazil. On Liffe, quality for October delivery stood at $515 a tonne on August 22 against $518 the previous week.
Due to low prices, Indian coffee growers are facing acute problems. As gloom pervades the country’s two most productive coffee growing centres, Chikmagalur and Kodagu, small planters are being chased by moneylenders for recovery of dues.
“The scene in Karnataka and also in Kerala, the country’s second largest coffee growing state, is today no less grim than when collapse in cotton prices five year ago.
According to industry analysts, the banks will finally have to treat the major portion of loans given to coffee planters as non-performing assets, since Indian cost of production of both arabica and robusta remains much higher than their world prices.
Exporters are worried that since the planters do not have the money to take care of the estates, there will be a fall in the quality of Indian coffee next season, making exports more difficult.
Gold prices have fallen as the dollar rose and the US stock markets climbed to their highest level since early July.
On August 23, gold was fixed at $305.95 an ounce on the London Bullion Market against $314.20 the previous week.
Kamal Naqvi, analyst at Macquarie bank said, gold sales were encouraged by the strong performance of the US stock market and by the strong dollar rebound which has risen to its highest level in two months.