Oil prices strengthen on supply increase
Oil prices strengthen on supply increase
LONDON (AFP): Crude prices bounced back after the kingpin OPEC
producers gathered in Vienna agreed to a modest increase in
supply and dismissed the price-setting formula that had been
drafted earlier this year.
Crude oil prices surged above 30 dollars in London and rose
above US$32 in New York as the market reacted to the dismissal by
OPEC of a price-setting mechanism and to a promise of a modest
production increase.
In London, the price of benchmark Brent crude for August
delivery rose to 30.41 dollars a barrel (for August delivery)
from 28.73 dollars.
In New York, light sweet crude for August delivery rose to
32.19 dollars a barrel from 31.82 dollars a barrel.
Prices touched 32 dollars in London and 33 dollars in New York
midweek.
The price rise was a reflection of market belief that the
pledge by OPEC to increase production by 708,000 barrels per day
from July 1 was insufficient to soothe overheating world oil
markets.
Dealers were also dismayed by OPEC's decision not to abide by
a recently-set mechanism designed to moderate prices.
Gold: tarnished. Gold prices fell back in thin trading volumes
under the weight of a strengthened dollar after the currency
losses of the previous week were reversed.
The spot price on the London Bullion Market weakened to
$285.30 from $290.30 an ounce.
While a stronger dollar came to afflict international demand
for the dollar-denominated contracts, the losses were contained
by the rise in oil prices, as the traditional link with "black
gold" showed its face once more.
Silver: slipper. Silver prices fell to their lowest level for
1-1/2 years mid-week, swept lower by gold, before recovering a
little of the lost ground before the week's end.
Cash prices on the London Bullion Market fell to $4.93 from
$5.06 an ounce.
Platinum and palladium: shine. Platinum prices soared to 11-
year highs as Russian exports continued to remain few and far
between on the international markets.
Platinum rose to $572 an ounce from $542.
In contrast, palladium prices fell back slightly on the London
market. Cash prices slipped to $660 an ounce from $669.
Base metals: heavy. The price of most base metals fell back
slightly in the wake of nickel, which dipped to an eight-month
low as the draw-down of market reserves began to slow and on
reduced demand from Asia and the United States.
Three-month nickel prices on the London Metal Exchange fell to
$7,740 a ton from $8,240.
Three-month copper remained unchanged at $1,788 a ton.
Aluminum fell to $1,562 a ton from $1,569 a ton.
Zinc slipped to $1,141 a ton from $1,142.5.
Lead fell to $433 from $439 a ton.
Tin rose to $5,540 a ton from $5,455.
Rubber: bounce. Rubber prices rose slightly amid thin trading
volumes.
In Kuala Lumpur, the RSS1 index rose to 2.68 ringgit per kilo
from 2.66 ringgit. The SMR20 index held at 2.30 ringgit.
The London rubber index rose by 10 pounds to 517.5 pounds per
ton.
Cocoa: hot. Cocoa prices rose back from recent losses as
dealers feared for the political stability of Cote d'Ivoire, the
world's leading producer, and in Indonesia, another important
producer country that has been racked by internecine violence.
In London, September contracts rose to 659 pounds a ton from
656 pounds.
Dealers were keenly awaiting news of the forthcoming harvest
in west Africa.
Coffee: blend. Coffee prices remained under pressure, close to
eight-year lows, inspite of frost in some regions of Brazil.
In London, Robusta prices rose by four dollars to $907 a ton.
In contrast in New York, Arabica (for September delivery) fell
to 89.50 cents a pound from 91.35 cents.
Although some frosts were reported in southern Brazil, market-
watchers said that there had been little damage caused to
plantations there.