OIL increased to a nine-month high after Greece won a second bailout, and as concern that tension with Iran will disrupt supplies countered speculation the global economy may falter and curb fuel demand. Iran said it had stopped selling crude to France and Britain. Oil for April delivery was at $106.31 in electronic trading on the New York Mercantile Exchange.
Futures rose 2.5 per cent after the euro-area ministers approved 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing debt relief, shielding the region from a default. Iran stopped selling oil to the countries from February 21, preempting a European Union ban.
Crude oil for March delivery gained $2.60 to $105.84 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Futures have risen 7.1 per cent this year. The more active April contract increased $2.65, or 2.6 per cent, to $106.25 a barrel on the Nymex.
Greece will enjoy an economic rebound now that European finance ministers have approved the rescue package, IIF managing director Charles Dallara said.
Brent touched $121.88 on February 22, the highest level since May 5, following Iran’s announcement of the oil export halt. The European Union on January 23 agreed to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
Tehran is looking to find buyers after top consumers China, India and Japan cut purchases. Iran has stopped sales to British and French companies in retaliation against an embargo announced by the European Union that comes into effect from July 1. The world’s fifth-largest exporter said it would sell to new customers.
But Southeast Asian refiners are unwilling or unable to take in Iranian crude, either due to issues related to the sanctions or their plants’ inability to process the crude, which has a higher sulphur content. The ability to pay for the crude is another issue, as sanctions also target financial institutions dealing with Iran’s central bank, which is the main conduit for oil revenues.
Southeast Asia’s major economies – Indonesia, Malaysia, the Philippines, Singapore and Vietnam – consumed almost 3.5 million bpd of oil in 2010, making it the third- largest demand centre in Asia behind China and Japan, according to the BP Statistical Review of World Energy 2011.
Iran’s halt to exports to British and French companies could also affect Royal Dutch Shell’s refineries in Singapore and the Philippines, which process Iranian crude, industry sources said. Singapore imported around 20,000 barrels per day (bpd) of Iranian crude over the past year, according to industry estimates.
EU nations bought a combined 18 per cent of Iran’s exports of crude and condensates, or 452,000 barrels a day, in the first half of 2011, according to the U.S. Energy Department. France purchased 49,000 barrels a day and the UK 11,000 barrels.
In New York, Brent crude rose for a fourth day, hitting a fresh nine-month high and a record in euro terms on February 23,
creating a new headache for cash-strapped Europe on heightened tensions between Iran and the West.
US crude rose further, as investors sold off a key spread — the premium of international benchmark Brent to US futures — after a government report showed a drop in inventories at the Cushing Oklahoma delivery point for the New York Mercantile Exchange’s contract.
Brent crude for April delivery rose 77 cents to $123.67 a barrel, off the session high of $124.50, the highest for front-month Brent since May 3 last year. Rising for the sixth consecutive session, US April crude settled at $107.83, gaining $1.55, after having climbed to a session high of $108.05, the highest settlement for front-month Nymex crude since May 4 last year.
GOLD edged down on February 22, from a 2-½-week high as concerns about Greece’s ability to implement an unpopular bailout deal balanced the gains triggered by the actual agreement and slower factory activity in China contributed to the fall. China’s physical demand has slowed since the Lunar New Year celebrations in January, and India’s demand from its jewellery sector is also declining.
Spot gold rose to $1,759.84 an ounce in early trade, its highest since February 3, before reversing course to fall 0.18 per cent to $1,755.86 an ounce. US gold fell $1 to $1,757.50 an ounce.
Cash gold staged its biggest one-day rise in two weeks on February 21, climbing 1.5 per cent along with riskier assets after the Eurozone finance ministers gave the greenlight to a 130-billion-euro bailout for Greece.
Gold has been seesawing in the range between $1,700 and $1,760 since late January, tracking Greece’s torturous path to securing the bailout, while physical demand provided limited support.
Spot platinum pierced through the 300-day moving average and hit $1,702 an ounce, its highest in nearly five months. The gold-platinum spread dropped to below $60 an ounce, its lowest since late September, down from a peak near $220 in early December. Traders said the rapid gains in platinum could be a combination of a breakthrough of a key technical resistance and worries about supply in top producer South Africa.
In the London market, gold rose to a three-month high on February 23 and headed for its biggest one-week rally in a month as Europe’s bailout deal with Greece lifted the euro.
Spot gold was at $1,775.35 an ounce, against $1,775.79 late on February 22. It earlier rallied to a high of $1,784.46 an ounce, its strongest since November 15, but failed to maintain traction above $1,780 an ounce.
Platinum rose towards $1,730 for the first time since September after news on February 22 that an illegal strike at number two platinum miner Impala’s Rustenburg mine was likely to cut customer deliveries in April by about 50 per cent.
Spot platinum eased 0.1 per cent on the day to $1,717.74 an ounce, having gained more than 10 per cent in the last month on market expectations for disruptions to South African supply.
ON February 20, copper surged the most since November after a second bailout for Greece eased concern that a European debt crisis will crimp metals demand, and as China took steps to spur bank lending and economic growth.
European finance ministers approved 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing more debt relief to shield the region from a default. The proportion of cash that Chinese lenders must set aside will fall half a percentage point as of February 24, the People’s Bank of China said, lowering the
requirement for the second time in three months. China is the world’s largest copper user.
Copper for three-month delivery settled 0.7 per cent higher at $8,235.50 a metric ton on the London Metal Exchange. Prices slid 6.7 per cent over six sessions before February 20. Copper for May delivery rose 1.1 per cent to $3.7565 a pound.
In the London market, copper prices rose on February 21, after Greece secured a rescue package from euro zone finance ministers to avert an imminent default. Three month copper on the London Metal Exchange ended at $8,449 a tonne, up more than 2 per cent from a d ay earlier close of $8,235.50. The agreement on the 130 billion euro ($172 billion) bailout programme, while long expected, will help Greece meet repayment needs next month.
Demand from the world’s biggest copper consumer has been slack, with copper stocks in Shanghai warehouses last week at their highest in nearly a decade. But copper stocks in warehouses monitored by the LME continued to fall, with the latest data showing a drop of 450 tonnes to 305,425, their lowest point since early September 2009.
China’s refined copper imports fell almost 18 per cent in January, and analysts said imports were likely to stay weak to March despite monetary easing. But China’s recent announcement of a cut in the amount of cash that banks much hold is expected to boost lending capacity by more than $50 billion and may help spark domestic metals demand.
In the London market, copper slipped on February 23, hit by expectations of a contraction in the euro zone economy and its implications for demand for industrial metals. Three-month copper on the London Metal Exchange ended at $8,390 a tonne, down from February 22 close of $8,435.