LONDON, March 22: Oil prices plummeted this week after the United States ditched diplomacy and embarked on a long-awaited war in Iraq that triggered a partial reversal of safe-haven flows out of commodities and into stocks.

Oil prices lost almost one-fifth of the their value as traders banked on a swift war without major supply shortfalls on world markets.

Maybe some traders have moved away from the commodity sector into the stock markets. But the commodity sector is still seen as attractive and safer for investments as it never falls or rises as much as the stock markets do. he said.

Gold prices thus held fairly stable, slipping slightly, as investors remained nervous about how the war would unfold.

GOLD: Gold prices slid back yet further after tumbling the previous week, although the decline steadied as the market generally chose to watch and wait for developments in Iraq.

By Friday afternoon, the precious metal had dipped to 333.50 dollars per ounce on the London Bullion Market from 350.20 dollars the previous week.

Gold is going to be determined by the war in Iraq now, just like the other commodity markets, said SG Securities analyst Stephen Briggs.

If things continue not to be problematic for American and British forces and the market continues to believe that it is going to be a short war, then it will put downward pressure on gold, he said.

The war’s influence would also be felt indirectly through movements in the dollar, which climbed on news that the war had begun.

Few investors opted for the safe haven of gold on Thursday’s outbreak of hostilities with Iraq, working on the widely held market assumption that the conflict would result in a swift victory for US-led troops.

SILVER: Silver fell back slightly along with gold.

Although the metal suffers from bad fundamentals it is a bit of a surprise that it had done so badly, said Briggs.

Nonetheless, he added: It is hard to see it coming back up.

Silver was trading on the London Bullion Market at $4.4025 an ounce on Friday against 4.5400 a week earlier.

PLATINUM AND PALLADIUM: Platinum prices slid back further after hitting 22-year highs during the week before, again reflecting the sentiment towards gold.

On Friday, the price of an ounce of platinum stood at $662 on the London Platinum and Palladium Market from $688 the previous week.

The fact that the market seems to think the war is going to be simple has finally affected platinum as well, said Briggs.

The metal had held up much longer than gold due to much better fundementals, said Briggs.

But even when the war is out of the way, platinum will remain supported by tight supplies, he added.

Palladium prices traded at $226.0 per ounce from $232.50.

OIL: Oil prices plunged by about 18 per cent after news that the United States had abandoned diplomatic efforts to disarm Iraq triggered a slump that gathered pace as US-led forces rolled into Iraq meeting little initial resistance.

The price of benchmark Brent North Sea crude oil for May delivery fell to $24.80 a barrel in late London trading on Friday from $30.13 a week earlier.

In New York, April-dated light sweet crude futures fell to $27.20 from $33.36 the previous week.

Oil has been down seven days in a row and has dropped $12.5 a barrel in 16 days, said Peter Gignoux, head of oil at Schroder Salomon Smith Barney.

However with Iraq hogging the market’s attention, this had minimal effect.

Interestingly, the situation in Nigeria which would be bullish under normal circumstances, is ignored by the market because of the war in Iraq, said Prudential Bache trader Chrisopher Bellew.

RUBBER: Rubber prices bounced up to new six-year highs on concerns about a supply shortfall.

The physical situation seems still uncertain with the wintering affecting the crop volumes in Thailand in particular, said Symington analyst Martin Hampson.

In Kuala Lumpur, the RSS index rose to 4.025 ringgit per kilo from 3.830 the previous week.

SUGAR: Sugar prices were generally weaker, although the market saw some support in New York.

There has been some trade buying in the raw market (in New York) that has supported the market at lower levels, so prices came up again, said Czarnikow trader John Kovaks.

This support was not seen so much in the white market (in London).

On LIFFE, a tonne of white sugar for May delivery dropped slightly to $220.0 on Thursday from $221.20 a week earlier.

On the CSCE in New York, a pound of unrefined sugar for May delivery rose to 7.75 cents from 7.62 cents the previous week.

SOYA: US soya prices fell back over the week with news of likely rain during the sowing period at the end of this week and next week.

On the Chicago Board of Trade (CBoT), a bushel of soya for March delivery edged down to 574.50 cents from 575.25 the previous week.

Soyabean meal — used in animal feed — for March delivery lost ground to 172.10 dollars per tonne from 174.50 the previous week.

GRAINS: Grain prices slipped back on US markets during the week on factors including forecasted rain for the sowing period, which is good for yields.

Uncertainties about the war in Iraq also had an impact, while the Department of Agriculture weekly export figures for grains were additionally up on the previous week.

In Chicago a bushel of wheat for March delivery fell to 294.75 cents from 303.25 cents a week earlier.

A bushel of maize in Chicago for March delivery eased to 233.75 cents from 235.50 the previous week.

On LIFFE, the price of a tonne of wheat for March delivery rose to 64.10 pounds from 63.00 a week earlier.

COCOA: Cocoa prices were boosted during the week as speculators squared positions as they monitored the unfolding situation in the Ivory Coast.

The country has been wracked by a six-month civil war which has seen France send troops in an attempt to enforce peace.

On Thursday, rebels boycotted a meeting of Ivory Coast’s new peace government, and instead sent a team bearing a list of demands.

Traders would be closely watching the situation, said analyst Luis Rangel from brokerage Fimat.

On LIFFE, London’s financial futures exchange, the price of cocoa for May delivery increased to 1,323 pounds a tonne on Thursday from 1,289 the previous week.

On the CSCE, the New York futures market, the May contract was boosted to 2,029 dollars per tonne from 1,980 dollars.

COFFEE: Coffee prices rose during the week on speculative buying in response to factors including a lower forecast for Brazil’s coffee harvest.

“Coffee futures gapped higher on good speculative buying and small fund short covering to extends its gains,” said Refco analyst Ann Prendergast.

On LIFFE, Robusta quality for May delivery rose to 762 dollars per tonne from 746 dollars the previous week.

WOOL: Wool lost ground this week both in major global producer Australia and in Britain.

In Australia, the price dropped an extra 3.2 per cent on average, trade body the Australian Wool Industries Secretariat (AWIS) said.

According to AWIS, prices were depressed in part because a large amount of low-quality wool had arrived on the market, which was of no interest to major Chinese buyers.

Production uncertainty was continuing, and investors were likely to remain careful, it added.—AFP