Oil and gold prices bounced higher this week as investors sought a safe haven while other commodities fell on fears that the financial crisis could sap global economic growth and dent demand. However, profit-taking was in evidence Friday as world stock markets soared, driven by hefty gains in the banking sector after the US government announced plans to cordon off the debt and toxic investments at the heart of the global credit crunch.
OIL: Oil prices jumped briefly above 103 dollars per barrel before pulling back on profit-taking after an extremely volatile five days for the financial markets. After slumping below 90 dollars at the start of the week, crude prices then jumped back into three figures.
"The market got oversold ... reacting to all this bad financial news," said Victor Shum of international energy consultancy Purvin and Gertz. Oil, like gold, is seen as a safe haven investment in times of economic turmoil.
Prices jumped about six dollars on Wednesday after the US government's 85-billion-dollar bailout of insurance giant AIG failed to reassure skittish investors and prompted a rush into commodities as a safe haven from the financial market storm. On Tuesday, prices had struck seven-month lows under 90 dollars as the turmoil sparked worries about the prospect of a further drop in energy demand, traders said.
Opec this week cut its world oil demand growth forecast for 2008 to 1.02 percent from 1.17 percent previously, in the face of falling demand already occurring in the United States, the world's biggest energy consumer. Further unrest in Nigeria, Africa's second largest oil producer after Angola, provided support.
The main militant group in southern Nigeria - the Movement for the Emancipation of the Niger Delta (MEND) - said it had destroyed a major oil pipeline belonging to Royal Dutch Shell.
The attack is the fifth on a Shell facility in Rivers State, the centre of Nigeria's oil industry, in the space of a week. Since it first emerged in early 2006 MEND, which says it is fighting for a larger share of southern Nigeria's oil revenue to go to local people, has cut oil production by more than one quarter.
By Friday, New York's main oil futures contract, light sweet crude for delivery in October, was at 101.33 dollars, down from 102.67 dollars a week earlier. Brent North Sea crude for November eased to 97.91 dollars from 99.33 dollars.
PRECIOUS METALS: Gold prices enjoyed their biggest one-day gain in almost three decades as the precious metal burst past 800 dollars an ounce thanks to its status as a haven in times of economic turmoil. Global stock markets tumbled most of the week following the collapse of US investment bank Lehman Brothers, the sales of its peer Merrill Lynch and British bank HBOS, and after the rescue of US insurance giant AIG.
Gold prices soared 85 dollars or 11 percent on Wednesday - the largest one-day increase for 28 years. "Gold staged its biggest one-day move since 1980 as the metal saw a surge of safe-haven buying," said James Moore at TheBullionDesk.com.
The yellow metal, which is used in jewellery, dentistry and electronics, remains below its record high of 1,032.70 dollars an ounce, reached on March 17 - four days after it had breached 1,000 dollars for the first time.
On Wednesday, precious metals consultancy GFMS forecast that gold could soon reach 950 dollars but was unlikely to hit a new historic peak in 2008. "I'd be far from surprised if we see a further bank failure or two in the next few months. Add that to an unwinding of dollar gains and you should see gold back over 900 dollars and maybe 950 dollars," GFMS executive chairman Philip Klapwijk said in the group's latest Gold Survey.
"We expect that factors such as financial market concerns, global growth, dollar expectations and inflationary pressures are likely to continue to dictate investor sentiment towards gold and in turn drive prices," analysts at Barclays Capital wrote in a research note to clients. On the London Bullion Market, gold rallied to 869 dollars an ounce at Friday's late fixing from 750.25 dollars a week earlier.
Silver gained to 12.93 dollars an ounce from 12.52 dollars. On the London Platinum and Palladium Market, platinum eased to 1,155 dollars an ounce at the late fixing on Friday from 1,187 dollars. Palladium declined to 233 dollars an ounce from 241 dollars.
BASE METALS: Base metals prices mainly fell heavily as global recession fears stoked concern about slackening demand. The problems in the finance sector increase "the chances of more widespread recession," said BaseMetals analyst William Adams.
By Friday, copper for delivery in three months firmed to 7,080 dollars per tonne on the London Metal Exchange from 7,075 dollars a week earlier. Three-month aluminium fell to 2,592 dollars per tonne from 2,639 dollars. Three-month lead dipped to 1,840 dollars per tonne from 1,895 dollars.
Three-month zinc sank to 1,735 dollars per tonne from 1,824 dollars. Three-month tin dropped to 17,199 dollars per tonne from 19,150 dollars. Three-month nickel declined to 16,598 dollars per tonne from 18,977 dollars.
COFFEE: Coffee prices lost ground. By Friday on Liffe, London's futures exchange, Robusta for November delivery fell to 2,092 dollars per tonne from 2,154 dollars a week earlier. On the New York Board of Trade (NYBOT), Arabica for December delivery dropped to 133.05 US cents per pound from 139.20 cents.
COCOA: Cocoa prices edged ahead. By Friday on Liffe, the price of cocoa for December rose to 1,522 pounds per tonne from 1,498 pounds a week earlier. On the NYBOT, the December cocoa contract advanced to 2,690 dollars per tonne from 2,569 dollars.
SUGAR: Sugar prices were mixed in subdued trade. By Friday on Liffe, the price per tonne of white sugar for December delivery slipped to 377.70 pounds from 384.70 pounds the previous week. On NYBOT, the price of unrefined sugar for October delivery rose to 13.60 US cents per pound from 12.43 cents.
GRAINS AND SOYA: Grains and soya prices declined. "The major driver in the weakness of the grain market is essentially the financial crisis that is occurring," said Allendale analyst Joe Victor. By Friday on the Chicago Board of Trade, maize for December delivery was down to 5.42 dollars per bushel from 5.63 dollars the previous week.
November-dated soyabean meal - used in animal feed - dropped to 11.35 dollars from 12.02 dollars. Wheat for December delivery fell to 7.05 dollars per bushel from 7.19 dollars.
RUBBER: Malaysian rubber prices dipped but dealers forecast a rebound next week. On Friday, the Malaysian Rubber Board's benchmark SMR20 fell to 282.40 US cents per kilo from 288.10 US cents per kilo a week ago.