Oil slides as investors bank profits
LONDON, June 14:World oil prices fell sharply this week in turbulent trade as commodity investors tracked the strengthening dollar and took profits after crude’s recent record-breaking run.
The market was also dampened as details emerged about a meeting on June 22 of the world’s biggest oil producers and consumers to discuss sky-high crude prices that remain at elevated levels.
Saudi Arabia is organising the summit in the Red Sea city of Jeddah after crude struck a record high of nearly $140 a barrel last week, stoking fears of surging global inflation and weaker economic growth.
OIL: New York crude dived lower after striking a historic high of $139.12 one week ago on concerns over tightening global supplies.
We are still leaving open the likelihood of fresh record highs next week, a development that would confirm this week’s trade as merely a consolidation phase within last Friday’s (June 6) huge trading range, said Jim Ritterbusch, president at trading advisory firm Ritterbusch and Associates.
Crude futures have been volatile this week, gaining five dollars on Wednesday, then slumping by the same amount early Thursday and extending losses on Friday.
Oil sank Thursday as the dollar rallied against rival currencies, traders said. A stronger US unit saps demand for dollar-priced commodities which become more expensive for foreign buyers.
The New York oil contract had however rocketed by $5.07 to a close of $136.38 on Wednesday after publication of a US energy inventory report.
The Middle East Economic Survey (MEES), in its latest issue, quoted a senior advisor to Saudi Oil Minister Ali al-Nuaimi as saying the recent surge in prices was unacceptable to the kingdom.
When you see the increase in price and these gyrations -- 11 dollars a barrel in one day -- this is unacceptable to us, Ibrahim al-Muhanna said.
This could hurt the global economy and even the long-term interest in oil, Muhanna said, but declined to comment on what actions the kingdom would propose in Jeddah.
Saudi Arabia, a close Western ally and the top Opec oil producer, has come under huge US pressure to boost output to help end volatility in world markets.
The Organisation of the Petroleum Exporting Countries (Opec) cartel on Friday cut its 2008 estimate of growth in world oil demand, as high prices and slower economic growth brake demand in major industrialised countries.
The IEA, the oil market watchdog for industrialised countries, also sent a strong message to reassure markets that it would release strategic oil stocks if supplies were disrupted by tension, or an eventual attack, over Iran’s nuclear programme.
By Friday, New York’s main oil futures contract, light sweet crude for July slumped to $133.74 from $138.54 a week earlier.
Brent North Sea crude for delivery in July dived to $133.75 from $137.69.
PRECIOUS METALS: Most precious metals weakened in line with the stronger US currency, traders said.
Gold soon began to lose ground as the dollar began to rally, said James Moore, analyst at specialist metals website TheBullionDesk.com.
On the London Bullion Market, gold fell to $866 per ounce at Friday’s late fixing from $890.50 a week earlier.
Silver recoiled to $16.31 per ounce from $17.19.
On the London Platinum and Palladium Market, platinum eased to $2,043 per ounce at the late fixing on Friday from $2,050 a week earlier.
Palladium rose to $450 per ounce from $429.
BASE METALS: Base metals prices enjoyed mixed fortunes, with limited support stemming from tight world stockpiles.
The base metals have generally been trying to consolidate in recent days, said BaseMetals. com analyst William Adams.
By Friday, copper for delivery in three months rose to $7,980 per tonne on the London Metal Exchange from $7,815 a week earlier.
Three-month aluminium increased to $2,945 per ton from $2,899.
Three-month nickel jumped to $24,000 per ton from $22,800.
Three-month lead fell to $1,775 per ton from $1,935.
Three-month zinc declined to $1,900 per ton from $1,955.
Three-month tin eased to $21,000 per ton from $21,800.
SUGAR: Sugar prices rose, lifted by high crude oil prices. The raw material is used in the production of ethanol, an alternative to gasoline or petrol.
By Friday on LIFFE, the price per ton of white sugar for August delivery climbed to 363 pounds from 336.20 pounds the previous week.
On NYBOT, the price of unrefined sugar for July delivery increased to 10.61 US cents per pound from 10.02 cents.
GRAINS AND SOYA: Maize or corn struck yet another historic peak of $7.25 per bushel on Thursday as investor sentiment was driven by bad weather conditions in key producer the United States.
The commodity has now rocketed by 60 per cent in value since the start of 2008.
The main impact on this market this week has been the recent rains and flooding that we had in the (US) midwest, said US Commodities analyst Dax Wedemeyer.
Rains popping up consistently over the last month and it is causing some heavy floodings.
By Friday on the Chicago Board of Trade, maize for July delivery soared to $7.13 per bushel from $6.50 the previous week.
July-dated soyabean meal -- used in animal feed -- rose to 15.47 dollars from $14.57.Wheat for July delivery rallied to $8.59 per bushel from $8.11.
RUBBER: Rubber prices rallied as the monsoon season in major Asian rubber growing countries cut supplies, dealers said.—AFP