Crude oil prices fell off record peaks last week as traders seized on news of a failed plan to blow up US-bound passenger planes that prompted expectations of a drop in demand for jet fuel. Coffee prices struck the highest level for six and a half years and nickel forged a new record.
British police revealed Thursday that they had foiled a plot to wreak "mass murder" with simultaneous mid-air explosions, triggering heightened airline security measures and rattling global financial markets.
However, James Moore, analyst for specialist website TheBullionDesk.com, cautioned that "it is worth noting that for all the disruptions, alerts and media coverage, no terror attack took place". On Friday, the Commodities Research Bureau's index of 17 commodities fell to 346.30 points, from 351.05 points the previous week.
GOLD: The price of gold - which usually benefits from its safe-haven status in times in geopolitical instability - fell despite news of the foiled bomb attack.
According to analysts, the downwards move was due to investors switching funds into US dollars amid plunging oil prices. "Flight-to-safety dollar buying, coupled with long liquidation in the oil market, sent prices lower," said Moore.
UBS analyst John Reade added: "Gold has failed to live up to its safe haven status, falling in the wake of a major terror alert and in sympathy with equities and other risk assets." A stronger dollar makes dollar-denominated gold more expensive for buyers holding other currencies. On the London Bullion Market, gold prices dropped to 644.50 dollars per ounce at Friday's late fixing, from 652.25 dollars a week earlier.
SILVER: Silver prices held firm in volatile trade.
Silver struck 12.69 dollars per ounce on Thursday - the highest point since May 31 - on news of the bomb plot, but has since pulled back slightly. On the London Bullion Market, silver prices firmed to 12.27 dollars per ounce at Friday's fixing, from 11.20 dollars the previous week.
PALLADIUM AND PLATINUM: The sister metals stabilised. "Platinum and palladium are taking the lead from gold in the absence of other external catalysts," said Barclays Capital analysts. On the London Platinum and Palladium Market, platinum stood at 1,245 dollars per ounce at the late fixing Friday, from 1,241 dollars the previous week. Palladium fell to 321 dollars per ounce on Friday from 323 dollars the previous week.
BASE METALS: Base metals prices shot higher, particularly copper and nickel which were lifted by falling global stocks and industrial action. On Friday, nickel prices hit an all-time high of 27,300 dollars per tonne. Nickel, a metal used to help prevent corrosion, was underpinned by news of a strike in major producer Canada.
"Nickel hits a fresh high, supported by the low level of inventory and supply disruptions, highlighting supply constraints," Barclays Capital analysts said. The base metal's price has doubled since the start of 2006. Meanwhile, on Monday, workers began a strike at the Escondida mine in Chile, the world's biggest copper mine, in a dispute over pay. Copper prices climbed to 8,140 dollars per tonne on Thursday, below the record of 8,800 dollars set in May. On Friday, three-month copper prices on the LME gained to 7,910 dollars per tonne from 7,740 dollars the previous week.
Three-month aluminium prices rose to 2,564 dollars per tonne from 2,526 dollars. Three-month nickel prices climbed to 27,200 dollars per tonne from 25,400 dollars. Three-month lead prices advanced to 1,190 dollars per tonne from 1,085 dollars. Three-month zinc prices increased to 3,430 dollars per tonne from 3,435 dollars. Three-month tin prices gained to 8,450 dollars per tonne from 8,305 dollars.
OIL: London's Brent crude oil hit a record of 78.64 dollars on Monday after British energy giant BP revealed it had begun to shut down Prudhoe Bay, the biggest oil field in the United States, due to a pipeline leak. BP's decision over Prudhoe Bay shook the oil market because the field accounts for eight percent of total US production. Prices found further support from Wednesday's news of heavier-than-expected falls in motor fuel stockpiles in the United States, alongside falling crude reserves.
However on Thursday, crude futures slumped after British police said they had prevented a major bomb threat to US-bound aircraft. The news fuelled fears of falling demand for air travel and jet fuel, which is refined from crude oil.
The price falls came as BP said it was still producing 120,000 barrels of oil per day from the stricken 400,000-bpd Prudhoe Bay field, and hoped to keep some output operational. Losses accelerated after Anglo-Dutch energy giant Royal Dutch Shell said it was resuming 173,000 barrels per day of crude output after plugging a pipeline leak in southern Nigeria.
News of the fixed pipeline meant that current Nigerian crude output has nonetheless been reduced by around 620,000 barrels per day, or 24 percent of the country's total production, due to militant attacks in the Niger Delta.
Traders also monitored concerns ranging from Israel's offensive in Lebanon, Iran's defiance of Western efforts to curb its uranium enrichment, and potential hurricane damage to oil installations in the US Gulf of Mexico. At about 1600 GMT on Friday in New York, a barrel of crude for delivery in September sank to 74.10 dollars per barrel from 75.05 dollars the previous week. In London, a barrel of Brent North Sea crude for delivery in September slumped to 75.43 dollars per barrel, from 76.39 dollars.
RUBBER: Rubber prices fell as rains receded in leading producing countries in Asia. "The market responded to better availability of raw material due to more favourable weather conditions in Asia," said Corrie MacColl trader Rashid Ahmed. On TOCOM, Tokyo's commodity exchange, natural rubber for January delivery fell to 266.50 yen per kilogramme on Friday, from 271.70 yen a week earlier. Singapore's RSS 3 December contract eased to 229 US cents per kilogramme on Friday, from 230.75 US cents a week earlier.
COCOA: Cocoa prices rose as investors awaited news on the latest harvest in major producer Ivory Coast.
On the Liffe, London's futures exchange, the price of cocoa for September delivery increased to 873 pounds per tonne on Friday, from 851 pounds a week earlier. On the New York Board of Trade (NYBoT), the September contract advanced to 1,565 dollars per tonne on Friday, from 1,537 dollars a week earlier.
COFFEE: Coffee prices struck levels last seen six and a half years ago in London on worries over tight supplies in major producer Vietnam. On Thursday, Robusta quality coffee rose above 1,451 dollars per tonne - a level last reached in December 1999. "As a result of intensified worries about a shortage of Robusta in Vietnam, its top producer, the November contract increased" significantly, said Sucden analyst Michael Davies.
Andrea Thompson, an analyst at Coffee Network, added: "We're facing a record Vietnamese crop and probably a record world Robusta crop in 2006/2007, but the over-production is going to be very marginal because Robusta consumption growth world-wide has been so strong." Meanwhile Arabica coffee prices slipped on expectations of a bumper crop in leading exporter Brazil. On Liffe, Robusta quality for November delivery gained to 1,408 dollars per tonne on Friday, from 1,335 dollars a week earlier. On NYBoT, Arabica for December delivery slid to 108.80 US cents per pound on Friday, from 109.45 cents.
SUGAR: Sugar prices sank to 403.70 dollars in London on Friday - the lowest point for five and a half months. "The market remains weak as a result of low demand and plentiful supplies," Davies added. On Liffe, the price of a tonne of white sugar for October delivery dropped to 407 dollars, from 432 dollars a week earlier. On NYBot, the price of unrefined sugar for October delivery declined to 13.40 US cents per pound, from 14.39 cents.
GRAINS AND SOYA: Grains and soya prices fell as favourable weather prompted forecasts of large harvests in the United States. "The weather will remain the most important influence on the market," noted AG Edwards Victor Lespinasse.
On the Chicago Board of Trade, the price of wheat for September delivery fell to 3.77 US dollars per bushel on Friday, from 4.00 dollars a week earlier. Maize for September delivery decreased to 2.29 dollars per bushel on Friday, from 2.47 dollars. August-dated soyabean meal - used in animal feed - dipped to 5.54 dollars per tonne on Friday, from 5.79 dollars. On the Liffe, the price of a tonne of wheat for November delivery fell to 81.25 pounds on Friday, from 81.45 pounds.
COTTON: Cotton prices rose to their highest level for nearly two months, before losing steam as Chinese demand weakened.
On the New York Cotton Exchange (NYCE), the December contract stood at 55.85 US cents per pound on Friday, from 56.75 US cents a week earlier. The Cotton Outlook Index of physical cotton increased to 59.90 US cents on Thursday, from 59.10 US cents a week earlier.
WOOL: Wool prices steadied. The Australian Eastern index closed at 7.42 Australian dollars per kilo on Thursday, from 7.41 the previous week. The British Wooltops index stood at 401 pence on Thursday, from 403 pence the previous Thursday.
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