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Oil prices storm to record highs, gold shines

LONDON: World oil prices rocketed to news historic peaks this week, above 74.0 dollars in New York and London, owing to low stocks of gasoline in the United States and tensions over Iran’s nuclear programme.

Gold prices surged to the highest point since 1980, as the metal benefited from its safe-haven status amid geo-political tensions. There were record peaks, meanwhile, for platinum and base metals copper and zinc.

Oil and precious metals saw their values slump late in the week owing to profit-taking. The Commodities Research Bureau’s index of 17 commodities struck a historic high of 357.96 points on Wednesday.

On Friday, the index stood at 353.10 points on Friday, from 339.02 points on Thursday of the previous week. Most commodity markets had closed early the previous week ahead of the Easter holiday weekend.

Gold: The price of gold surged to a 25-year high on Thursday as geopolitical and inflation concerns continued to propel higher the prices of precious metals. The price of an ounce of gold reached 645.85 dollars on the London Bullion Market, the highest level since November 1980 and a 24-percent rise since the start of 2006.

Gold prices later slumped, however, on profit-taking. Record high crude prices have raised fears about inflation, leading investors to seek out gold, which is seen as a safe store of value in volatile and uncertain times.

On the London Bullion Market, gold prices gained to 623.50 dollars per ounce at Friday’s late fixing from 593.00 dollars on Thursday of the previous week.

Silver: Silver prices hit the highest point, also for more than 25 years, before falling on profit-taking, mirroring the performance of sister metal gold.

Silver struck 14.74 dollars on Wednesday, the highest level since January 1981. On the London Bullion Market, silver prices dropped to 12.18 dollars per ounce at Friday’s fixing, from 12.61 dollars on Thursday of the previous week.

Palladium and Platinum: Platinum prices hit a new record high, driven by speculators, and strong demand from car manufacturers which use the metal in catalytic converters. Palladium rose also, while the sister metals later fell heavily on profit-taking. Palladium rose to 350.0 dollars per ounce on Friday , from 343.0 dollars the previous Thursday.

Base metals: Copper and zinc prices stuck fresh record highs and managed to hold on to the gains. Three-month copper prices on Friday reached a record high 6,625.15 dollars per tonne. Three-month zinc prices hit also a record high on Friday, of 3,270.0 dollars per tonne.

Base metal prices are surging owing low stock levels, supply difficulties and soaring investor interest.

Oil: World oil prices reached new peaks, above 74.0 dollars. New York’s benchmark contract for light sweet crude for June delivery hit an all-time peak of 74.45 dollars on Friday. In London on Thursday, the price of Brent North Sea crude for June delivery struck a record high of 74.22 dollars per barrel.

Adjusted for inflation, current oil prices remain below levels reached after the 1979 Iranian revolution. According to Barclays Capital, in November 1979 crude prices surged to a high of 88.72 dollars per barrel in today’s money.

Brent North Sea, which is a light sweet crude, is the price reference for two-thirds of the world’s traded oil according to the IntercontinentalExchange which operates the trading of Brent. The US Department of Energy had said Wednesday that US gasoline (petrol) stockpiles fell by 5.4 million barrels last week, twice analysts’s forecasts and ahead of the peak demand season for motor fuel.

The fall in gasoline stocks comes ahead of the driving season in the United States, which sees American drivers take to the roads on vacation beginning in May. Elsewhere, the market tracked events over Iran, the world’s fourth biggest crude producer.

Security analysts have said that in the event of a conflict over Iran’s nuclear programme, the Islamic republic could block the Strait of Hormuz, which is a congestion point for oil exports to Japan, the United States and Western Europe. Washington has accused Iran of working secretly to build nuclear weapons under cover of a nuclear energy programme it is developing with Russian assistance.

Iran denies this charge and says the programme is strictly for producing nuclear energy.

On Friday in London, a barrel of Brent North Sea crude for delivery in June jumped to 73.80 dollars per barrel, from 69.44 dollars on Thursday of the previous week.

In New York, a barrel of crude for delivery in June soared to 74.30 dollars per barrel on Friday from 70.82 dollars on Thursday of the previous week.

Sugar: Sugar prices gained as oil futures raced to record highs. Sugar cane is used to produce ethanol, a cheaper alternative to motor fuel. Sugar “has formed a semi-strong correlation with oil prices in its new role as a petro-commodity as high oil prices lift the demand for ethanol,” Sucden analysts said.

By Friday on LIFFE, the price of a tonne of white sugar for August delivery rose to 468.0 dollars, from 464.50 dollars on Thursday of the previous week.

On NYBot, the price of unrefined sugar for July delivery advanced to 17.34 US cents per pound, from 16.86 cents on Thursday of the previous week.

Cotton: Cotton prices extended losses owing to expectations of high supply in 2006/07 and after the United States posted low exports last week.

On the New York Cotton Exchange (NYCE), the July contract slipped to 52.70 US cents per pound on Friday, from 53.73 US cents on Thursday of the previous week. The Cotton Outlook Index of physical cotton stood at 57.45 US cents on Thursday, unchanged from a week earlier.

Wool: Trading in wool was shut this week in major exporter Australia owing to a public holiday. The Australian Eastern index had closed at 7.28 Australian dollars per kilo on April 13. The British Wooltops index stood at 417.0 pence on Thurday, unchanged from a week earlier. afp

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