LONDON – World oil price jumped this week to the highest levels since 2008, driven by Middle East supply fears and a weak dollar, while safe-haven gold hit a record as Portugal sought an EU bailout.
Other stand-out performances included tin, which enjoyed an all-time pinnacle on the back of stretched global supplies, and silver which scored
another 31-year peak.
Strong support came from the struggling greenback, which makes dollar-priced commodities cheaper for buyers using stronger currencies. That
tends to increase demand and prices.
The euro jumped on Friday to $1.4444, its highest level since January 2010, and touched a May 2010 peak against the yen, as traders bet on more rate hikes from the European Central Bank (ECB).
The ECB hiked rates by a quarter-point to 1.25% on Thursday to combat inflation, delivering the first increase in nearly three years.
Markets were also rattled after China hiked its interest rates on Tuesday in a renewed attempt to curb lending and bring inflation under control.
OIL: Prices jumped on Friday to their highest levels in more than two years as the market was driven by simmering tensions in the Arab world, particularly in Libya, and concerns over elections in Nigeria. Brent North Sea crude for delivery in May hit $124.84, the highest price since early August 2008.
New York’s main contract, light sweet crude for delivery in May, soared to $111.90 – a level last seen in September of the same year. The market rose sharply this week on the back of violent unrest in Libya, popular unrest in the wider Middle East, and as the dollar has weakened against the euro.
“Another day and another upside move on oil,” said PVM Oil Associates analyst David Hufton.
“All eyes are focussed on Libya and the news for those looking for a quick resumption of supplies and lower oil prices is not good,” Hufton said.
“Libyan leader Moamer Kadhafi’s troops have destroyed the infrastructure of the only oil fields under the control of his opponents, cutting off their only source of finance.”
As the uncertainty continues in Libya, Gulf states have piled pressure on Yemen’s embattled President Ali Abdullah Saleh, saying they expect him to quit following more than two months of bloody protests.
Elsewhere, major oil exporter Nigeria on Thursday announced a third delay in legislative polls, due at the weekend, in some parts of the country after failure to overcome logistical problems.
Added to the mix, fresh data showed Thursday that US initial jobless claims tumbled three percent last week, reinforcing signs the troubled labor market is on the mend in the United States, the world’s biggest oil consumer.
Traders were also watching carefully Friday the latest news on the eurozone debt crisis after Portugal became the third eurozone member after Greece and Ireland to seek a debt bailout.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in May soared to $125.33 a barrel from $118.21 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May, increased to $111.58 a barrel from $107.50.
PRECIOUS METALS: Gold soared Friday to a record high above $1,470 per ounce and silver topped $40 as investors sought safety amid fears over the weak dollar, high inflation, Middle East unrest and eurozone debt.
The glamorous commodity hit $1,474.98 an ounce on Friday, extending this week’s blistering record run. At the same time, sister metal silver struck a 31-year high at $40.46 an ounce.
“Precious metal prices are currently being driven by the weak US dollar and inflation risks, partly because of high oil prices,” Commerzbank analysts wrote in a research note to clients.
Gold, whose main drivers are jewellery and investment buyers, is regarded as a safe haven in times of economic and political uncertainty.
The metal also won solid support this week as debt-ravaged Portugal submitted a formal request for a multi-billion-dollar bailout from the European Union.
By late Friday on the London Bullion Market, gold rallied to $1,469.50 an ounce from $1,418 a week earlier. Silver soared to $40.22 an ounce from $37.63. On the London Platinum and Palladium Market, platinum rose to $1,803 an ounce from $1,773. Palladium climbed to $798 an ounce from $772.
BASE METALS: Tin prices hit a record high at $33,000 per tonne on Friday, propelled by concerns over a weak dollar, stretched global supplies and keen Chinese demand.
China is the world’s biggest producer of the industrial metal and also consumes vast amounts, while Indonesia is the largest tin exporting nation.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months rallied to $9,896 a tonne from $9,306 a week earlier.
Three-month aluminium rose to $2,712 a tonne from $2,610.
Three-month lead edged up to $2,852 a tonne from $2,672.
Three-month tin soared to $33,100 a tonne from $31,400.
Three-month zinc leapt to $2,526 a tonne from $2,333.
Three-month nickel jumped to $27,530 a tonne from $25,425.
COCOA: The market fell further, after losing 10 percent in value the previous week, amid ongoing turmoil in top global producer Ivory Coast.
The EU decided Friday to lift sanctions on two key ports in Ivory Coast, the vital cocoa industry’s regulator, and an oil firm, as requested by the country’s internationally recognised president.
Following Alassane Ouattara’s plea, the 27-nation European Union used a fast-track procedure to remove the ports of Abidjan and San Pedro from a list of entities subjected to an assets freeze.
The EU said in a statement that it decided “to lift its restrictive measures on certain entities immediately in order to support the legitimate authorities of Cote d’Ivoire and in response to their request.”
In a television address, Ouattara asked the EU to lift sanctions on certain “public entities” as well as the two ports.
Ivory Coast’s cocoa industry has been strangled by international sanctions trying to choke off Laurent Gbagbo’s economic power and force him to step down from the presidency.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in July stood at #1,886 a tonne compared with #1,898 for the May contract a week earlier.
In New York on the NYBOT-ICE, cocoa for July fell to $2,969 a tonne from $3,018 for the May contract a week earlier.
GRAINS AND SOYA: Prices mostly edged higher. “The (maize) market is being steered by low inventory levels in the US and the fear that weather conditions could cause delays to planting,” said Commerzbank analysts in a note.
By Friday on the Chicago Board of Trade, maize for delivery in May jumped to $7.60 a bushel from $7.36.
May-dated soyabean meal – used in animal feed – eased to $13.84 a bushel from $13.93 a week earlier. Wheat for May gained to $7.72 from $7.59.
COFFEE: Coffee prices advanced in London and New York. By Friday on LIFFE, Robusta for delivery in July stood at $2,463 a tonne compared with $2,421 for the May contract a week earlier. On NYBOT-ICE, Arabica for May rose to 275.60 US cents a pound from 264.80 cents.
SUGAR: Sugar prices weakened. By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in May dropped to 26.01 US cents a pound from 27.14 cents a week earlier. On LIFFE, the price of a tonne of white sugar for May decreased to #703.30 from #714.10.
