Oil prices hit fresh record highs last week, boosted by weakness in the dollar and simmering tensions over key producer Iran which pushed the London Brent contract above 147 dollars.
Brent North Sea oil for August delivery jumped as high as 147.25 dollars, beating the previous record of 146.69 dollars set on July 3. New York's main oil contract, light sweet crude for August, hit another record peak of 146.90 dollars after breaching 146 dollars for the first time.
The oil price jumped back into record territory after the European single currency leapt as high as 1.5868 dollars in afternoon trading on Friday. The weak dollars boosts demand for dollar-priced oil which becomes cheaper for buyers using stronger currencies, analysts said.
Oil also found solid support as traders monitored the latest newsflow on Iran. The European Union expressed concern Friday after Iran test-fired missiles and said the tests would compound worries over its nuclear ambitions, a statement from the French EU presidency said.
The 27-nation EU called on Iran to negotiate an end to the standoff over its suspect nuclear activities after Tehran tested several missiles, including one said to be capable of striking Israel.
Prices also swept back into record territory on Friday after the European single currency briefly leapt above 1.59 dollars. "As ever, the market remains very sensitive to any potential supply disruptions and geopolitical tensions," said Sucden analyst Andrey Kryuchenkov.
Oil rallied by almost six dollars on Thursday on the back of simmering geopolitical tensions over key producer Iran and worries over stretched global crude supplies, traders said. Prices had dived below 140 dollars on Monday as a result of a then strengthening US currency, underlining the extreme volatility that the market is currently experiencing.
On Friday, traders continued to track Iran, which is Opec's second-biggest crude oil producer with output of about 4.0 million barrels per day. The White House played down the risk of war between Iran and the United States, despite Iranian missile tests and some tough talk by US Secretary of State Condoleezza Rice.
Rice warned Iran that Washington had beefed up its security presence in the Gulf and would not hesitate to defend its ally Israel. Iran insists its nuclear drive is aimed solely at generating energy but some Western nations fear it could be aimed at making an atomic bomb and have called for a freeze of uranium enrichment.
Opec would not be able to replace Iran's oil production if supplies were halted in case of a war with Israel or the United States, the oil cartel's chief has said. At the same time, the oil producers' cartel has cut its estimate for world crude demand over the next two decades, predicting that high prices would compel consumer countries to be more efficient in their use of energy.
The International Energy Agency has meanwhile forecast that tension on oil markets was set to ease early next year amid an economic slowdown in the United States. Elsewhere, in crude producer Nigeria, kidnappers seized at least one foreigner working for a German company in the restive Niger Delta oil region, a police source said on Friday. Violence in the southern delta region has already reduced Nigeria's total oil production by a quarter since January 2006.
By the Friday close, Brent North Sea crude for August had eased back to 144.15 dollars, leaving it down slightly from 144.86 dollars a week earlier. New York's main oil futures contract, light sweet crude for August rose to 146.55 dollars from 144.10 dollars.
PRECIOUS METALS: Gold rallied on the back of growing inflationary pressures, record high oil prices and turmoil on global equity markets. "Further weakness in the dollar, heightening inflationary concerns on the back of buoyant oil prices as well as safe-haven buying boosted by concerns over the broader economy and geopolitical tensions saw (gold) prices regain upward momentum," said Barclays Capital analysts.
On the London Bullion Market, gold advanced to 962.75 dollars per ounce at Friday's late fixing from 931.25 dollars a week earlier. Silver rose to 18.38 dollars per ounce from 18.01 dollars. On the London Platinum and Palladium Market, platinum firmed to 2,030 dollars per ounce at the late fixing on Friday from 2,012 dollars a week earlier. Palladium eased to 454 dollars per ounce from 456 dollars.
BASE METALS: Star performer aluminum hit a record while copper beat a retreat from its all-time high hit the previous week. Aluminium hit a historic 3,380 dollars per tonne on Thursday after Chinese moves to cut production, analysts said. That eclipsed the old record of 3,255 dollars that was set on March 6.
"Aluminium has hit a record high ... following an announcement that China's top 20 aluminium smelters are to cut production by 5-10 percent from this month," Barclays Capital analysts said.
"Tight power supplies and high energy prices ... constrain output growth across the globe and particularly in China." They said this was "the catalyst for a tighter market and much higher prices." By Friday, copper for delivery in three months fell to 8,365 dollars per tonne on the London Metal Exchange from 8,640 dollars a week earlier.
-- Three-month aluminium jumped to 3,380 dollars per tonne from 3,100 dollars.
-- Three-month lead rose to 2,025 dollars per tonne from 1,555 dollars.
-- Three-month zinc gained to 2,050 dollars per tonne from 1,757 dollars.
-- Three-month tin climbed to 23,201 dollars per tonne from 22,475 dollars.
-- Three-month nickel advanced to 21,900 dollars per tonne from 20,275 dollars.
COCOA: Cocoa prices were lower on profit-taking after reaching multi-year highs the previous week on concerns over tight supplies in exporter Ivory Coast. By Friday on Liffe, London's futures exchange, the price of cocoa for September delivery had dropped to 1,550 pounds per tonne from 1,609 pounds a week earlier. On the New York Board of Trade (NYBOT), the September cocoa contract fell to 2,926 dollars per tonne from 3,136 dollars.
COFFEE: Coffee prices weakened on the prospect of abundant supplies in key producer Brazil, traders said. By Friday on Liffe, Robusta for September delivery fell to 2,361 dollars per tonne from 2,480 dollars a week earlier. On the NYBOT, Arabica for September delivery slid to 142.62 US cents per pound from 151.90 cents.
SUGAR: Sugar prices drifted lower in quiet trading conditions. By Friday on Liffe, the price per tonne of white sugar for October delivery dipped to 390.50 pounds from 393 pounds the previous week. On NYBOT, the price of unrefined sugar for October delivery declined to 13.80 US cents per pound from 13.91 cents.
RUBBER: Malaysian rubber prices eased this week despite keen Chinese demand. "There is demand for rubber, especially from China," said one dealer. On Friday, the Malaysian Rubber Board's benchmark SMR20 slid to 322.40 US cents per kilogramme (2.2 pounds) from 324.80 a week ago.
Comments
Comments are closed.