ON November 26, oil prices had risen to above $99 a barrel on the London market, coming close to the $100 milestone, but retreated soon on expectations that an early Opec meeting this week could decide to increase supply.

Opec members are to meet in Abu Dhabi on December 5 to debate whether to raise output for a second time this year, in an effort to prevent crude oil prices from reaching the key $100 a barrel level. Some Gulf countries, including Saudi Arabia were pushing for the production increase, while some other members, including Venezuela, opposed the move.

The fear of a slowdown in the US drone down oil prices by more than $3 a barrel on November 27. West Texas Intermediate fell to an intraday low of $94.35 a barrel and in late trading was $2.93 down at $94.77 a barrel. However, crude oil prices are still trading within the range of $90-$100 that has prevailed for most of the last six weeks.

Oil has risen more than 40 per cent since August, boosted by a decline in the US dollar to a series of record lows versus the euro that has spurred buying of oil, gold and other commodities.

Apart from the hope of a production increase from the cartel, prices also came under pressure after Goldman Sachs downgraded its forecast for the US economy. Any US slowdown could lead to weaker demand for oil.

The onset of colder weather in the US Northeast, a major consumer of heating oil for household use, has contributed to the upswing in prices as traders bet higher winter demand will strain inventories that are lower than normal.

The United States has urged Opec to boost production because of shrinking oil inventory levels in developed economies in the run up to the northern hemisphere winter. The Opec agreed in September to raised output by 500,000 barrel per day (bpd), but this has so far failed to stem oil’s advance.

Saudi Arabia, the group’s most influential member, has not disclosed its position yet, only noting that it was currently pumping about nine million b/d, in line with Opec’s September agreement. Opec member Indonesia said it would support a supply boost.

Opec ministers will weigh the risks of a credit slump and potential recession curbing demand in top consumer the United States, against concerns of a supply shortfall during the peak winter demand season.

Consumer worries over dwindling stockpiles, an influx of financial funds and the unprecedented weakness of the US dollar have driven oil to record highs near $100 in recent weeks. Crude stocks are expected to fall by 800,000 barrels while gasoline was forecast to rise by one million barrels.

ON November 28, gold slid under the $800 mark on the London market, as softer oil prices and a firmer dollar against the euro dented the metal’s wider appeal for investors. Spot gold hit an intraday high of $815.30, but later fell sharply, losing more than 2 per cent at one point to a low of $792.10.

A stronger dollar makes gold dearer for non-US buyers while easing oil prices take the heat out of gold’s role as a hedge against oil-led inflation.

However, traders generally remained confident on the metal’s ability to contain losses below $800 due to expectations for further dollar losses as investors anticipated cuts in US borrowing costs that would dent the dollar’s yield appeal.

Gold hit a 28-year peak above $845 on November 7, but has since stalled twice in attempting to reach those levels again. Analysts are refusing however to rule out another run to the November peak and a record high seen in January 1980 at $850.

In other bullion markets, benchmark October 2008 gold futures on the Tokyo Commodity Exchange ended 76 yen per gram or 2.6 per cent lower at 2,837 yen.

Comex gold futures extended losses with the most active December contract trading down $15.60 at $798.30. Gold de-hedging slowed markedly in the third quarter of this year, with 0.98 million ounces or 31 tonnes taken off the global producer hedge book, a study from precious metals consultant GFMS showed.

Meanwhile, platinum hit a record $1475 a troy ounce on November 23, gaining 2 per cent in the week ended November 24-25 on news of further supply disruptions in South Africa.

Impala Platinum, the world’s second-largest producer, shut one of two shafts at its Marula mine after a worker was killed. Strike action by the National Union of Mineworkers is planned for December 4 and the government is to start a nationwide safety audit this month, which is raising concerns about further supply disruptions in an already tight market.

LEAD, was being squeezed by commodities funds, creating artificial tightness despite relatively good supply.

But the funds now face higher carrying costs, and lead, most commonly used in batteries, is starting to see its price buckle. Production previously not registered is trickling back to the market.

From January through mid-October, London Metal Exchange prices more than doubled, peaking at $3,890 a ton on October 10 as reported global inventories fell to 17-year lows.

But after it became the second metal behind nickel to exceed its inflation-adjusted high, lead nose-dived by 28 per cent. LME lead is currently trading at $2,920/tonne, down 11.5 per cent on the week.

LME stocks fell 50 per cent in the first nine months of the year, but then doubled to more than 40,000 tons in October.

This wasn’t because production was ramped up or demand collapsed. In fact, production in China, the world’s biggest lead maker, has been dropping, owing to a government crackdown on industrial polluters.

This has left plenty of spare capacity within the Asian nation. A 13 per cent tax on lead-concentrate imports in China has changed the industry’s economics, making it more expensive for Chinese smelters to buy the critical raw material.

Customs data show that imports of concentrate dropped 10 per cent from the year-earlier level in September. In the same month, a 10 per cent export duty trimmed Chinese exports of refined lead by 70 per cent.

But while visible inventories have risen of late, most of this lead hasn’t shown up in LME warehouses, leaving analysts to wonder whether it‘s piling up in China instead.

It could be that Chinese consumption is growing rapidly and eating up any surplus. The rising number of cars, scooters and electric bicycles in China has caused battery demand to soar, the International lead and Zinc Study Group notes.