Global oil prices jumped this week on keen US demand and geopolitical worries, while coffee and sugar soared on weather-related supply fears in Brazil. Gold also forged notable peaks on strong haven demand as investors sought safety amid the uncertain global economic outlook, analysts said.
OIL: Crude futures leapt to a four-month pinnacle on the back of US winter weather and more turmoil in oil exporters Nigeria, South Sudan and Venezuela. "Brent crude held above $110 a barrel, underpinned by geopolitical concerns in Africa and Venezuela, while US oil touched its highest in four months as stockpiles are forecast to fall on winter demand and new pipeline capacity," wrote Investec oil analysts.
US prices also got a boost from the release of the minutes of the Federal Reserve's end-January policy meeting, which showed the central bank relatively bullish on the economy and a growing minority advocating early policy tightening. On Wednesday, US crude struck the highest level for four months at $103.58 a barrel, while Brent hit the steepest point so far this year at $110.82.
Prices then tailed off as poor Chinese manufacturing data heightened concerns about waning demand from the Asian economic powerhouse, the world's top energy consumer. HSBC's preliminary reading for its purchasing managers' index (PMI), tracking manufacturing activity in China's factories, contracted in February to its lowest level in seven months. Singapore's United Overseas Bank said oil prices receded "as traders put more weight on the weak China PMI data against the strong US demand" reflected in the latest US stockpiles data. The US Energy Department's petroleum stockpiles report raised hopes of improved demand after bouts of winter storms and bitter cold gripped large parts of the country.
Commercial crude inventories rose by 1.0 million barrels in the week ending February 14. US distillate reserves, including heating fuel, fell 300,000 barrels. By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in April stood at $109.64 a barrel compared with $108.38. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for April gained to $102.05 a barrel from $99.98 for the expired March contract a week earlier.
PRECIOUS METALS: Gold struck $1,332.45 an ounce, the highest point since October 31, driven by strong Asian demand. Sister metal silver notched up a similar peak at $22.06 an ounce. "An increase in interest amongst Asian buyers has seen a support in the current level of demand in the physical market," said CMC Markets analyst Nicholas Dale-Lace.
China overtook India as the biggest consumer of gold in the world last year, ramping up its demand by 32.0 percent from the 2012 level, the World Gold Council reported. Last year demand from China for gold for jewellery, coins and bars totalled a new record of 1,065.8 tonnes. That was ahead of Indian demand of 974.8 tonnes, according to the council representing leading gold producers.
The switch of places at the top of the ranking reflects in part a decision by the Indian government to reduce the importation of gold to help reduce a huge trade deficit. By late Friday on the London Bullion Market, the price of gold rallied to $1,323.25 an ounce from $1,320 a week earlier. Silver jumped to $21.74 an ounce from $21.09. On the London Platinum and Palladium Market, platinum grew to $1,422.50 an ounce from $1,426. Palladium eased to $739 an ounce from $740.
BASE METALS: Most base or industrial metals advanced on supply-side concerns, but gains were tempered by Chinese data. "The (aluminium) price was doubtless driven up by announcements by leading aluminium producers that production capacities are to be shut down," said Commerzbank analysts.
"Alcoa in Australia is permanently closing down a smelter with an annual production capacity of around 190,000 tonnes on account of the difficult market environment. "Rusal is also planning to shut down further capacities totalling 325,000 tonnes, having already closed facilities on the same scale last year." Elsewhere, French miner Eramet delayed a project to develop huge nickel resources at Weda Bay in Indonesia, triggering a big asset writedown.
It also reported a net 2013 loss of 370 million euros ($507 million) and slumping sales of nickel, a key raw material in the manufacturing of stainless steel. By Friday on the London Metal Exchange, copper for delivery in three months eased to $7,148 a tonne from $7,158.50 week earlier.
-- Three-month aluminium climbed to $1,780.25 a tonne from $1,751.75.
-- Three-month lead advanced to $2,149 a tonne from $2,140.
-- Three-month tin gained to $23,045 a tonne from $22,930.
-- Three-month nickel increased to $14,430 a tonne from $14,295.
-- Three-month zinc rose to $2,058.75 a tonne from $2,044.75.
COCOA: Prices remained at elevated levels, striking another 2.5-year high as global demand continued to exceed supply.
The commodity, which is mostly used to make chocolate, peaked on Thursday at $2,997 in New York, hitting a level last seen in September 2011. "Dry weather in West Africa ... could stress trees and hurt midcrop production," noted Jack Scoville, analyst at brokers Price Futures Group. By Friday on Liffe, London's futures exchange, cocoa for delivery in May stood at £1,843 a tonne compared with £1,851 a week earlier. On the ICE Futures US exchange, cocoa for May traded at $2,973 a tonne compared with $2,959.
COFFEE: The price of coffee vaulted to the highest level for more than one year, fuelled by fears over falling harvests in top producer Brazil. "There's no end to the crazy situation on the Arabica coffee market," said Commerzbank analysts.
Arabica jumped Thursday to 177.50 US cents, the highest level since October 2012. Robusta touched a ten-month peak at $2,019. "At 175 US cents per pound, Arabica coffee is now more expensive than at any time in the past 16 months," added Commerzbank analysts. "It is still the fear of crop shortfalls in Brazil that are driving the price up. According to Brazilian weather service Somar Meteorologica, the months of January and February were the driest for 30 years." By Friday on ICE Futures US, Arabica for delivery in May stood at 172.20 US cents a pound compared with 141 cents a week earlier. On Liffe, Robusta for May traded at $1,972 a tonne compared with $1,802.
SUGAR: Prices advanced to their highest levels in about two months on Wednesday, plagued by drought conditions in major producer Brazil. "Futures were sharply higher ... as traders worried about the drought in Brazil and the potential for crop losses from production for the coming harvest," said Price Futures Group analyst Jack Scoville.
"Some rain is forecast the weekend that should have be somewhat beneficial." He added: "Weather conditions in key production areas around the world are rated as mostly good except for the dry weather in Brazil. By Friday on Liffe, the price of a tonne of white sugar for delivery in May stood at $462.10 compared with $441 a week earlier. On ICE Futures US, the price of unrefined sugar for delivery in May traded at 16.85 US cents a pound compared with 15.94 US cents.
RUBBER: Prices in Kuala Lumpur declined due to lack of demand amid high stockpiles and poor data in China. The Malaysian Rubber Board's benchmark SMR20 fell to 191.25 US cents a kilo from 194.45 cents last week.
