Commodities hit by strong dollar; oil spikes on Iran
Commodity markets were roiled this week as the dollar surged against the beleaguered euro and oil prices spiked close to eight-month highs on simmering tensions over key crude producer Iran.
The European single currency tumbled to yet another 16-month dollar low under $1.27 on Friday as upbeat US payrolls data contrasted sharply with dire economic numbers in the crisis-hit eurozone, dealers said.
The stronger US unit makes dollar-priced commodities more expensive for buyers using weaker currencies and so tends to dampen demand and prices.
Data Friday showed the US unemployment rate dropped to 8.5 percent in December, the lowest level in nearly three years, as hiring jumped to 200,000, well above beat market expectations for a jobs gain of 150,000.
"This ... provides further justification for continued modest optimism about the US economy in 2012," said analyst Jason Schenker at Prestige Economics.
"Nevertheless, this ... does not dispel our rising concerns about sovereign debt issues in Europe, geopolitical risks in Iran and the fact that the growth rate of the Chinese economy in 2012 will be at the slowest pace since 2001."
OIL: Prices rose sharply this week as the European Union moved closer to an Iran oil embargo and Tehran warned the United States to remove its naval forces from the Gulf.
New York's light sweet crude jumped Wednesday as high as $103.74 per barrel, a level last seen on May 11. London Brent oil on Thursday hit $114.64, its highest since November 14.
Iran has threatened to disrupt shipping through the crucial Strait of Hormuz, where about 20 percent of the world's sea-transported oil passes.
The United States and allied nations accuse Iran of developing an atomic bomb but Tehran insists the program is exclusively for peaceful, civilian use.
"Fresh fears of a military confrontation that would endanger the flow of crude through the Strait of Hormuz have rattled oil markets since the start of the year," Barclays Capital said in a market commentary.
"As Iran ratchets up its anti-Western rhetoric and military exercises, the West continues to tighten its stringent sanctions against the country."
Prices trimmed gains on Thursday as US stockpiles unexpectedly rose, raising concerns about weak demand in the world's biggest oil-consuming nation. US crude reserves jumped 2.2 million barrels in the week ending December 30.
On Friday, the oil market digested news of a suicide bombing in Syria which killed 26 and wounded dozens of mostly civilians in Damascus.
"Rising tensions are going to continue to be a factor on Brent prices for the foreseeable future, with investors nervous about Iran as well as events in Syria," said CMC Markets analyst Michael Hewson.
The "suicide bomb in Damascus highlights the tensions in the region and if prices break above the three-month highs around $116 we could see a move to $120 fairly quickly."
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in February jumped to $112.50 compared with $107.02 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for February stood at $101.35, up from $98.99.
PRECIOUS METALS: Gold attracted fresh support, rising as the precious metal's status as a safe haven in times of economic and geopolitical turmoil drew investors.
"Gold appears relatively immune to the current strength of the US dollar," Commerzbank analysts said in a research note.
"Clearly, gold is becoming increasingly attractive again in view of the geopolitical risks and smoldering sovereign-debt crisis in the eurozone."
By late Friday on the London Bullion Market, gold jumped to $1,616.50 an ounce from $1,574.50 the previous week.
Silver rose to $29.40 an ounce from $28.18.
On the London Platinum and Palladium Market, platinum gained to $1,410 an ounce from $1,381.
Palladium eased to $632 an ounce from $636.
BASE METALS: Base or industrial metals were mixed in subdued trade.
"Metals are mixed in relatively featureless trading, while oil prices are higher as tension with Iran continues," said analyst Ed Meir at US-based brokerage INTL FCStone.
By late Friday on the London Metal Exchange, copper for delivery in three months fell to $7,485 a tonne from $7,555 the previous week.
Three-month aluminium firmed to $2,037 a tonne from $2,003.
Three-month lead decreased to $1,959 a tonne from $2,007.
Three-month tin rose to $19,650 a tonne from $18,900.
Three-month zinc retreated to $1,829 a tonne from $1,857.
Three-month nickel advanced to $18,610 a tonne from $18,360.
COCOA: Cocoa lost ground.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in March dropped to £1,329 a tonne from £1,355 a week earlier.
In New York on the NYBOT-ICE, cocoa for March slid to $2,021 a tonne from $2,076.
COFFEE: Prices extended last week's losses, with Robusta striking the lowest point since November 2010 as the market was hit by the rallying dollar.
By Friday on LIFFE, Robusta for delivery in March slipped to $1,755 a tonne from $1,806 a week earlier.
On NYBOT-ICE, Arabica for March declined to 219.30 US cents a pound from 225.80 cents.
SUGAR: Sugar edged higher in thin trade.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in March firmed to 23.36 US cents a pound from 23.22 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for March increased to £606.80 from £603.20.
GRAINS AND SOYA: Maize, wheat and soya prices traded within a narrow band.
By Friday on the Chicago Board of Trade, maize for delivery in March firmed to $6.48 a bushel from $6.46 a week earlier.
Wheat for December decreased to $6.32 a bushel from $6.52.
March-dated soyabean meal -- used in animal feed -- was up to $12.13 a bushel from $12.07.
RUBBER: Prices dipped on little buyer interest.
The Malaysian Rubber Board's benchmark SMR20 eased to 326.10 US cents a kilo from 326.60 cents the previous week.
© 2012 AFP