Tropical storm boosts increase in oil prices
Tropical storm boosts increase in oil prices
LONDON (AFP): The tropical storm over the Gulf of Mexico gave
a badly needed boost to flagging oil prices last week in London,
amid growing calls from OPEC for producers to stick to production
cuts and force up prices.
Brent, the reference North Sea crude, gained almost 10 cents a
barrel on the International Petroleum Exchange.
The storm is threatening off-shore operations and production,
as well as the loading and unloading of tankers, prompting
refineries to hoard reserves.
In addition, Saudi Arabia, Kuwait and Qatar called on other
Organization of Petroleum Exporting Countries to respect quota
cuts aimed at slashing production by 1.365 million barrels a day.
Elsewhere on the commodities markets, base metals continued to
lose ground, mostly due to hefty increases in warehouse stocks of
the London Metal Exchange.
Gold: unwanted. Gold prices dipped towards the end of the week
as investors moved away from the financial safehaven as the
initial storm around the release of the report into President
Bill Clinton's sex and lies scandal eased.
Gold closed on the London Bullion Market at about US$290.55 an
ounce, down $4.5.
Prices also slid in response to the recovery of the dollar
against the yen at the end of the week.
However, gold found some support as a refuge against inflation
after the U.S. Federal Reserve governor said he was concerned by
price rises in the United States, analysts said.
Silver: dip. Silver dipped by four cents to $4.94 an ounce on
the London Bullion Market in the wake of gold.
Palladium and platinum: flat. The two precious metals were
flat this week, following the delivery last week of the first
palladium supplies for 1998 to Japan.
The first deliveries of platinum and sister metal rhodium were
to arrive in Japan in the coming days, Japanese traders said.
Japan is the world's biggest importer of platinum group
metals, while Russia is the biggest palladium producer and second
biggest platinum producer, behind South Africa.
Palladium was unchanged at $288 an ounce, platinum lost five
dollars to $358 an ounce.
Copper: piled up. Copper prices on the London Metal Exchange
fell slightly this week, mainly due to a huge increase in LME
warehouse reserves of 16,875 tons to 362,725 tons.
Three-month copper fell $43 to $1,646.50 a ton.
Japan's Nippon Mining announced plans for a 30,000 tons
increase in capacity at its Saganoseki site, which produces
335,000 tons of copper annually.
Nickel: dull. Three-month nickel prices weakened
substantially, losing $70 to $4,077.50 a ton, while LME warehouse
stocks rose 510 tons to 59,022 tons.
Russia's Norilsk Nickel, the biggest producer in the world,
said its exports have not been affected by the country's
political and economic turmoil, something that would have driven
prices up.
Tin: flat. Three-month tin fell $42.50 to $5,377.50 a ton,
while LME reserves rose 465 tons to 8,370 tons, amid quiet
trading.
Oil: hot. Brent, the reference North Sea crude, rose to about
$13.73 a barrel for October, up from $13.62 a week before, as
storms in the Gulf of Mexico threatened delivery disruptions.
Traders said the tropical storm was due to worsen, threatening
both off-shore production in the gulf and tanker traffic.
This has prevented investors from selling before the weekend,
while refiners are building up reserves in case the weather does
not improve.
In another boost for the flagging oil price, Kuwait, Qatar and
Saudi Arabia appealed to OPEC and non-OPEC producers to stick to
their agreements on reducing production quotas.
In the medium term, the price of oil could average $12 to $16
a barrel from $18 over the past 10 years, the company said.
Rubber: flat. Rubber prices were stable this week, with
September rubber on the London rubber index at 470 pounds a ton,
and October rubber at 475 pounds a ton.
The RSS1 index in Kuala Lumpur rose slightly to 2.59 ringgits
a kilo from 2.57 ringgits.
Cocoa: cold. December cocoa prices on the LIFFE futures market
fell to 1, 013 pounds a ton from 1,071 pounds, amid continued
worry over the economic crisis in Russia, a major chocolate
consumer, and Brazil's financial turbulence.
Prices were also pressured by major selling from Ghana, the
world's second biggest producer.
Coffee: dark. Robusta coffee for November delivery fell
sharply to $1,598 a ton from $1,679 the previous week.
Supply was expected to remain finely balanced until December,
when Vietman's 1998-99 harvest will hit the markets, traders
said.
Indonesia is expecting a good 1999-2000 harvest, starting in
April 1999. After having suffered major droughts this season,
production should increase by about 15 percent to 6.7 million
sacks next year.
On the New York futures market, December Arabica coffee rose
to 101.85 cents a pound from 109 cents.
Sugar: powder. White sugar prices rose this week on the back
of a 70,000 ton tender from Europe, as well as bargain hunting
after last week's low prices.
Prices also rose in response to a decline in expectations of a
Brazilian interest rates cut, which would have triggered massive
selling by Brazilian producers to compensate.
Sugar on the LIFFE futures market for 1999 delivery closed at
$223.2 a ton, from $217.50.
Grains: stale. The U.S. grains market picked up on technical
factors at the end of the week.
However, it was depressed by weakness on the international
financial markets and the lack of support from US Federal Reserve
Chairman Alan Greenspan for a coordinated cut in interest rates
in G7 countries.
European Union reform to wheat subsidies, threatening a blow
to US wheat sales in Europe, also hit sentiment.
On the Chicago Board of Trade, September wheat rose five cents
to $2.53 for 27.2 kilos. September maize rose five cents to $1.95
a bushel of 25.4 kilos.