LONDON, Dec 8: Oil prices eased this week despite Opec’s decision to hold output levels and news of plunging crude reserves in the United States. Elsewhere, precious metals mostly rose on supply-side fears, while base metals sank on global and US economic outlook concerns.
Since striking recent record highs close to $100 last month, crude prices have crumbled by more than ten per cent in volatile trade.
According to Veronica Smart, an analyst for the Energy Information Centre, last month’s run above $99 per barrel was overdone.
My feeling is that the supply situation is not that uncomfortable compared to last year and that $100 was exaggerated -- helped by speculators and people coming into the commodity markets instead of equities, she said.
OIL: Prices spiked by as much as two dollars on Wednesday but fell back into negative territory after Opec left daily output quota unchanged at 27.25 million barrels.
The price of New York crude had struck a record high $99.29 on November 21, which had sparked widespread calls for Opec to hike output at this week’s output meeting in Abu Dhabi.
The Organization of Petroleum Exporting Countries (Opec) is regarded as a key player in the global energy market because it pumps about 40 per cent of global oil supplies.
There was also a muted reaction to a bigger-than-expected drop in US crude reserves. The US Department of Energy said inventories of crude had plunged by 8.0 million barrels in the week ending November 30, sharply more than forecasts for a drop of 1.25 million barrels.
Opec insists it has no control over high prices and that the market rally seen during much of the year does not really reflect supply and demand fundamentals.
The market is not controlled by supply and demand ... it is totally controlled by speculators who consider oil as a financial asset, said Opec secretary general Abdalla al-Badri in Abu Dhabi.
There had been some speculation the cartel would raise output by 500,000 barrels a day as gesture to calm the market.
Oil experts argue that prices are being supported by tight supplies of winter fuel during the peak-demand northern hemisphere winter.
At the same time, however, they add that there are fears of a US-led global economic slowdown that could dampen demand for energy.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in January, slid to $88.50, compared with $88.85 a week earlier.
In London, Brent North Sea crude for January nudged down to $88.62 from $88.68 the previous week.
PRECIOUS METALS: The prices of most precious metals rose, with platinum and gold winning support from a mining strike in leading producer South Africa.
Tens of thousands of mineworkers downed tools in South Africa on Tuesday in a one-day strike over safety standards, accusing their bosses of putting lives at risk for the sake of profits.
In the first stoppage by the National Union of Mineworkers since the end of apartheid, production was affected at mines nationwide.
On the London Bullion Market, gold prices advanced to $792.50 an ounce at Friday’s late fixing, from $783.50 a week earlier.
Silver firmed to $14.44 an ounce, from $14.23.
On the London Platinum and Palladium Market, platinum prices rose to $1,458 an ounce at the late fixing Friday, from $1,440 a week earlier.
Palladium fell to $344 an ounce from $349.
BASE METALS: Base metals prices fell across the board owing to fears over the prospect of slowing growth in key consumer the United States.
US job creation slowed in November, although not as bad as anticipated by most economists, confirming expectations of cooling economic growth, a government report showed Friday.
The report was consistent with slowing economic growth but not necessarily a harbinger of a severe economic downturn that some analysts have predicted.
On Friday, the price of copper for delivery in three months sank to $6,860 a ton on the London Metal Exchange from $7,045 a week earlier.
Three-month aluminium prices weakened to $2,466 a ton from $2,514.
Three-month nickel declined to $26,900 a ton from $27,100.
Three-month lead slid to $2,665 a ton from $3,022 .
Three-month zinc slipped to $2,395 a ton from $2,556 .
Three-month tin dropped to $16,688 a ton from $17,100 .
COCOA: Cocoa prices shot higher on supply concerns in key exporter Ivory Coast, whose output has been hampered by strikes.
Meanwhile the International Cocoa Organization said the world market has a cocoa deficit of 242,000 tons in the 2006/2007 season. That was higher than the previous estimate of 156,000 tons.
By Friday on the LIFFE, London’s futures exchange, the price of cocoa for March delivery rose to 1,036 pounds a ton, compared with 980 pounds last week.
On the New York Board of Trade (NYBOT), the March cocoa contract increased to $2,062 a ton from $1,983 last week.
COFFEE: Coffee prices drifted lower in London but held firm in New York amid quiet trading conditions.
By Friday on the LIFFE, Robusta quality for January delivery fell to $1,754 a ton, compared with $1,824 the previous week.
On the NYBOT, Arabica for March delivery firmed to 129.80 US cents a pound, from 129.20 cents the previous week.
SUGAR: Sugar prices firmed. By Friday on the LIFFE, the price per ton of white sugar for March delivery rose to 290.60 pounds from 287.20 pounds the previous week.
On the NYBOT, the price of unrefined sugar for March delivery stood at 9.92 US cents a pound, from 9.75 cents the previous week.
RUBBER: Rubber prices sank and are expected to continue their downward trend due to favourable weather conditions in Thailand, the world’s largest producer, analysts said.
If the good weather continues in Thailand, we expect prices to slide further, said an official at a rubber-producing firm.
On Friday, the Malaysian Rubber Board’s benchmark SMR20 dropped to 235.95 US cents per kilogramme from 237.30 cents last week.
WOOL: The wool market finished 0.9 per cent higher in major producer Australia, with keen demand from Asia and Europe.
It was another good market this week, with the market finishing on a strong note as it goes into the last sale before the Christmas break, the Australian Wool Industries Secretariat said.
There was a good spread of competition with buyers for China very strong and good competition from Italy, the rest of Europe and Korea. The Eastern Index rose to 9.98 Australian dollars a kilogramme, from 9.87 Australian dollars a week earlier. — AFP
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