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.
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 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.
"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.
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.
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.
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.
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.
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.