World oil prices jumped to almost 70 dollars a barrel during a shortened trading week, owing to heightened tensions over Iran's capture of 15 British sailors ahead of their release.
But the strong gains were later erased as profit-taking set in ahead of a long holiday weekend to mark Easter. Elsewhere, base metals struck record highs on dwindling stockpiles. Most global financial markets were closing on Thursday in preparation for Easter.
Prices fell later in the week, however, after Iranian President Mahmoud Ahmadinejad allowed 15 British sailors, held by Tehran for almost a fortnight for allegedly entering Iranian waters, to fly home. Prices were also weighed down by the release of four foreign oil workers abducted last week in Nigeria, Africa's biggest crude producer.
Nigeria has seen its oil production slashed since last year owing to disruption caused by numerous kidnappings of foreign workers. Crude futures enjoyed a brief rally towards the end of the week on news that US gasoline, or petrol, reserves plummeted by five million barrels last week - far more than market expectations for a drop of just 300,000 barrels.
Motor fuel stocks are being closely watched before the US driving season, which starts next month, when many Americans hit the roads for their summer holidays. Opec ministers insisted on Thursday that high oil prices are the result of geopolitical tensions, rather than a shortage of supplies.
"The high prices of late are due to the geopolitical situation. It has nothing to do with the fundamentals," Opec President Mohammed al-Hamili, who doubles as oil minister for the United Arab Emirates, said on the sidelines of an oil industry conference in Paris
By Thursday in London, a barrel of Brent North Sea crude for delivery in May fell to 68.10 dollars a barrel, from 68.64 dollars the previous Friday. In New York, a barrel of crude for delivery in May dropped to 64.14 dollars a barrel from 66.45 dollars.
Investors are piling into gold amid geopolitical concerns, since the yellow metal is seen as a safe store of value in times of political tension and high inflation. "While the release of the UK hostages may lead to some safe-haven reduction, gold should now find sufficient momentum of its own as speculative players appear more confident at increasing their risk exposure," said James Moore of TheBullionDesk.com.
Elsewhere, the average price of gold in 2007 is set to break records because of interest from investors amid geopolitical uncertainty, the precious metals consultancy GFMS said on Wednesday.
"It's looking pretty certain that the record in terms of the annual average, 614.50 dollars back in 1980, is going to fall this year," GFMS chairman Philip Klapwijk said as the independent research group published its annual Gold Survey.
Since the start of 2007 gold has traded at a average of 650 dollars an ounce. On the London Bullion Market, gold prices jumped to 673.50 dollars an ounce at Thursday's late fixing, from 661.75 dollars the previous Friday.
Silver is both a precious and industrial metal, as it is used by the jewellery and photographic sectors. On the London Bullion Market, silver prices gained to 13.58 dollars an ounce at Thursday's late fixing, from 13.35 dollars the previous Friday.
"Although further gains are possible we suspect prices (at these levels) are unsustainable," he added. The price of nickel has surged 50 percent since the start of 2007 and tripled in one year. A tonne of lead, meanwhile, struck an historic high of 2,015 dollars. On Thursday, three-month copper prices surged to 7,411 dollars a tonne on the LME, from 6,859.50 dollars the previous Friday.
Three-month aluminium prices rallied to 2,840 dollars a tonne from 2,803 dollars. Three-month nickel prices soared to 49,505 dollars a tonne from 43,795 dollars. Three-month lead prices jumped to 1,990 dollars a tonne from 1,925 dollars. Three-month zinc prices climbed to 3,401 dollars a tonne from 3,285 dollars. Three-month tin prices increased to 14,150 dollars a tonne from 13,650 dollars.
On the Chicago Board of Trade, the price of wheat for May delivery fell to 3.63 dollars a bushel on Thursday, from 3.75 dollars the previous Friday. Maize for May delivery rose to 4.41 dollars a bushel, from 4.38 dollars.
May-dated soyabean meal - used in animal feed - increased to 7.62 dollars, from 7.61 dollars. On the Liffe, London's futures exchange, the price per tonne of wheat for November delivery fell to 87.95 pounds, compared with 95.50 pounds for wheat for May. The May contract had been the most traded contract the previous week.