Oil prices soar to historic peaks above 46 dollars in New York

15 Aug, 2004

Oil surged to fresh historic peaks this week, above 46 dollars per barrel in New York, fuelled by concerns over disruptions to supply in the wake of reduced exports from Iraq, the fear of strike action in major producer Venezuela and the financial crisis at Russia's Yukos.
The Commodities Research Bureau's index of 17 commodities fell to 267.42 points on Friday from 269.63 a week earlier.
GOLD: Gold prices rallied strongly towards the end of the week as the dollar slumped following an explosion in the US trade gap to a record 55.8 billion dollars (45.2 billion euros) in June.
A weak dollar makes gold, which is priced in the US currency on world markets, more attractive to buyers using other currencies.
The dollar fell heavily against the euro Friday after the US trade gap mushroomed 19.1 percent, the sharpest deterioration in more than five years and far beyond Wall Street expectations.
Gold prices had fallen earlier in the week, hit by a strong dollar in the wake of the US Federal Reserve's move to hike interest rates by a quarter point to 1.50 percent.
"The precious metals sector reacted to the Feds interest rate increase as a stronger dollar prompted profit taking in gold," said James Moore, an analyst for the online magazine The Bullion Desk. com.
By Friday, gold prices stood at a fixing of 396.75 dollars per ounce on the London Bullion Market against 399 dollars a week earlier.
SILVER: Silver prices followed gold downwards earlier in the week but avoided large losses as a result of interest from speculative funds and strong gains made by base metals which, like silver, are used for industrial purposes.
"Silver was again tracking the gold market for the large part of the week," Moore said. "Overall trade should continue between 6.40 dollars and 6.80 as players take direction from the dollar," he added.
UBS analyst Andreas Maag meanwhile said that base metals could spur silver to rebound.
Silver prices fell to 6.48 dollars per ounce on Friday from 6.68 dollars a week earlier.
PLATINUM AND PALLADIUM: Platinum prices shot to the highest level for almost four months, helped by strike action in major producer South Africa, but palladium failed to break out of its rut.
"Platinum was the biggest winner across the precious metals complex," Barclays Capital analyst Kamal Naqvi said.
"Lomin, the world's third largest platinum producer, announced that an unofficial strike had broken out at its Karee mine in South Africa, but said that it was not expected to have a major impact on production," he added.
Palladium meanwhile suffered as a result of over-production, analysts said.
By Friday, platinum prices jumped to 857 dollars per ounce on the London Platinum and Palladium Market from 829 dollars a week earlier.
Palladium prices traded at 211 dollars per ounce against 213 dollars the previous week.
BASE METALS: Base metals prices mostly rose, boosted by strike action at several world production sites.
Aluminium benefited also from a fall in inventories, analysts said.
"We expect a slowing of production growth to keep aluminium into deficit well into next year," Societe Generale analyst Stephen Briggs said. "Indeed, the shortfall may progressively increase in size and may outlast those in other metals," he added.
By Friday, three-month copper prices stood at 2,767 dollars per tonne on the London Metal Exchange from 2,784 dollars a week earlier.
Three-month aluminium prices climbed to 1,721 dollars per tonne against 1,683.
Three-month nickel prices rose to 13,050 dollars per tonne from 12,855.
Three-month lead prices stood at 866 dollars per tonne from 861.
Three-month tin prices advanced to 8,790 dollars per tonne from 8,700.
Three-month zinc prices weakened to 992 dollars per tonne from 1,010.
OIL: Oil prices surged to new all-time high levels, above 43 dollars per barrel in London and higher than 46 dollars in New York on heightened fears over possible supply shortages in the face of soaring global demand. New York's benchmark contract, light sweet crude for delivery in September, shot up 80 cents to 46.30 dollars in deals Friday, shattering Thursday's intra-day record high of 45.75 dollars.
Brent North Sea crude oil for September rocketed 1.11 dollars from the previous close to 43.40 dollars Friday, smashing the intra-day record high of 42.56 dollars set Thursday.
Alarmed at the unrelenting surge in prices, the International Energy Agency said this week that the market was showing "irrational exuberance".
With prices reaching unprecedented levels, oil kingpin Saudi Arabia said it was ready to increase its production immediately by 1.3 million barrels per day, if called upon to help. But the market was sceptical.
"The question is when could this happen and more importantly what happens after that? If the Saudis increase production and prices are still firm, what else? There is no other capacity available," GNI-Man Financial trader Paul Goodhew said.
Fuelling prices this week was primarily heavy violence in Iraq, which forced the major producer to halve its exports.
Fears of possible strike action in Venezuela, which provides 15 percent of the United States' crude imports, was another key factor.
Worries about disruptions to Russian crude exports as a result of the financial crisis at the country's oil titan Yukos also helped to lift prices, traders said.
"The record levels achieved this week have been driven by concerns about over-stretched supplies, underlined by the fact that Iraqi production from the south of the country has been shut in," analysts at the Sucden brokerage firm said.
Iraq has been maintaining oil exports at around half the usual level at Basra's southern terminal amid a Shiite militia threat to attack oil infrastructure in the face of a US offensive against them in the holy city of Najaf.
Exports were said to be running at an average rate of 41,000 barrels per hour, compared with the normal 80,000 following the closure of a southern pipeline because of the threat of attack.
The market was increasingly nervous about Venezuela, the world's fifth largest producer, ahead of a referendum there Sunday on the rule of President Hugo Chavez.
Traders are concerned that anything other than a convincing victory for the left-leaning leader could lead to a crippling strike and a reduction of oil exports.
A lengthy Venezuelan general strike in late 2002 and early 2003 shut down the country's oil industry.
By Friday, the price of benchmark Brent North Sea crude oil for September delivery jumped to 43.15 dollars per barrel in late London trading against 40.94 dollars a week earlier.
In New York, the reference light sweet crude September contract traded at 46.10 dollars per barrel from 44.25 dollars a week earlier.
RUBBER: Rubber prices held steady this week, supported by rain in major producer Thailand.
"Prices have moved up slightly and we've seen a bit more activity on the Tokyo market," said one London analyst, who wished to remain anonymous.
"Prices have been supported by a higher demand, and mainly by rains in Thailand in the producing regions which have reduced the raw material supply."
In Osaka, the RSS 3 October contract stood at 143.70 cents on Friday against 144.80 a week earlier.
Singapore's RSS 3 October contract traded at 124.25 US cents from 124.50 the previous Friday.
COCOA: Cocoa prices fell, hit by rains in leading producer Ivory Coast.
"Returning rainfall in the Ivory Coast... leaves the market vulnerable to the downside," said Boyd Cruel, an analyst at Alaron Trading.
On the CSCE, the New York futures market, the September contract dropped to 1,616 dollars per tonne on Friday from 1,642 dollars the previous week.
On LIFFE, London's futures exchange, the price of cocoa for December delivery stood at 941 pounds per tonne from 938 a week earlier.
COFFEE: Coffee futures remained depressed amid expectations of large harvests in Brazil and Vietnam, the world's two biggest producers respectively.
On LIFFE, Robusta quality for November stood at 664 dollars per tonne on Friday from 651 a week earlier.
On New York's CSCE market, Arabica for December delivery traded at 68.55 cents per pound from 70.55.
COTTON: Cotton futures fell to the lowest level since October 2002 on forecasts of record high harvest production. "Cotton futures tumbled on Thursday following the release of the USA supply/demand data," Refco analyst Ann Prendergast said.
"As expected the report was bearish. US production was put at over 20 million bales, far greater than the highest estimate. "If the crop were to come in as it is, it would be the US's second largest crop after the 2003/03 crop of 20.3 million bales," she added.
New York's December contract fell to 44.00 cents per pound on Friday from 46.45 a week earlier.
The Cotton Outlook Index of physical cotton stood at 52.45 cents on Thursday from 54.50 a week earlier.
GRAINS AND SOYA: Soya prices rebounded after the arrival of colder weather in the United States' Midwest region, while grains fell. On LIFFE, wheat for November delivery stood at 66 pounds per tonne on Friday from 68.25 a week earlier.
In Chicago, the price of wheat for September delivery fell to 300 cents per bushel from 322.75.
Maize for September delivery fell to 217.50 cents per bushel from 225.25.
Soyabeans for August delivery rose to 678 cents per bushel from 617.50.
August-dated soyabean meal - used in animal feed - climbed to 201.50 dollars per tonne from 187.
SUGAR: Sugar prices fell on news that India would not need to import as much of the commodity as first thought.
"India has recently reasserted its position that it will not need to import sugar because it has ample stocks, dampening import expectations, or at least deferring them," Prendergast said.
By Friday on LIFFE, the price of a tonne of white sugar for October delivery fell to 240.50 dollars from 250.10 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for October delivery stood at 7.91 cents from 8.18 the previous week.
WOOL: Wool prices slid, hit by a strong Australian dollar which dented demand.
The Australian Eastern index fell to 7.88 Australian dollars per kilo on Thursday from 7.99 a week earlier.
The British Wooltops index stood at 431 pence from 436.

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