Oil suffers roller-coaster week on Libya unrest, Japan quake
Oil endured a roller-coaster ride this week, spiking to 2008 peaks as unrest hit crude exporter Libya, before slumping after a deadly massive earthquake rocked the world's third largest economy Japan.
Gold hit a new record on Monday, as escalating violence in Libya spurred safe-haven demand from investors, amid concerns of spreading unrest in the volatile Middle East and North Africa region.
However, investors' attention switched to Japan on Friday, as a 8.9-magnitude earthquake and tsunami disaster devastated large parts of northern Japan's Pacific coast.
Many raw materials were also hampered by the stronger greenback, which makes dollar-priced commodities more expensive for buyers using weaker currencies. In turn, that tends to dent demand and prices.
The European single currency fell sharply against the dollar after Moody's slashed Greece's debt ratings and then downgraded Spain on Thursday, stoking fresh worries over the eurozone debt crisis.
OIL: World oil prices began the week by surging to 2.5-year highs on turmoil in large crude exporter Libya.
But by the end of the week, New York crude oil had dived back under $100 a barrel as traders bet that a huge earthquake in Japan would slash the country's crude imports.
"The demand for oil (in Japan) could be lower, at least temporarily, because of the earthquake," said Commerzbank analyst Carsten Fritsch.
"After China and the US, Japan is the world's third biggest consumer of commodities and is dependent on imports for virtually all commodities," he added.
More than 1,000 people probably died in the massive earthquake and tsunami disaster, Kyodo News agency said early Saturday.
The report came as grim updates indicating appalling loss of life kept emerging from along the hard-hit east coast of northern Honshu island, where the monster wave destroyed more than 3,000 homes.
Crude futures also slumped as Saudi Arabia launched a massive security operation in a menacing show of force to deter protesters from a planned a "Day of Rage" to press for democratic reform in the world's biggest oil exporter.
Illegal demonstrations were supposed to start after Muslim Friday prayers at noon but as the mosques emptied there were no signs of rallies, with security men manning checkpoints in key locations across several cities.
Saudi Arabia, with about a quarter of the world's oil reserves, is a linchpin of security in the Middle East and signs of unrest in the kingdom are being nervously monitored by the United States and other major powers.
Ongoing unrest in Libya has almost wiped out production in its key oil sector, slashing output by 1.4 million barrels a day to under 300,000, the head of French oil giant Total said on Friday.
"Oil production in Libya must have fallen to between 200,000 and 300,000 barrels a day maximum," the chief executive of Total, Christophe de Margerie, told reporters in Paris.
"There are about 1.4 million barrels a day less" than normal, since the start of an uprising against Libyan ruler Moamer Kadhafi on February 15 which has led to heavy fighting between his forces and rebels.
Margerie's was the most severe estimate yet of the impact of fighting on oil production. The International Energy Agency (IEA) on Thursday said output had shot "well below" the official Libyan estimate of 500 thousand barrels per day.
Saudi Arabia has said it is committed to the stability of the oil market and to ensuring that oil supplies remain available amid the Libyan unrest.
OPEC on Friday warned that high prices could dampen demand later this year, as the oil cartel upgraded only slightly its 2011 world demand growth estimate.
By Friday afternoon on London's Intercontinental Exchange, Brent North Sea crude for delivery in April had dropped to $113.50 a barrel from $115.77 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for April, slumped to $99.86 a barrel from $103.45 a week earlier.
PRECIOUS METALS: Gold enjoyed a new record peak, hitting $1,444.95 per ounce on Monday, dragging sister metal silver to another 30-year high at $36.75.
The precious metals draw strength in times of geopolitical and economic turmoil because they are regarded as a safe store of value.
"The debt crisis in eurozone peripherals is rekindling and the situation in North Africa and the Arab world remains extremely tense," said Commerzbank analysts in a note.
"Furthermore, speculative financial investors ... have taken profits after prices marked an all-time high at the start of the week."
By late Friday on the London Bullion Market, gold eased to $1,411.50 an ounce from $1,427 a week earlier.
Silver decreased to $34.10 an ounce from $34.43.
On the London Platinum and Palladium Market, platinum dipped to $1,777 an ounce from $1,828.
Palladium slipped to $754 an ounce from $811.
BASE METALS: Prices sank heavily on a cocktail of factors, including a brace of downbeat trade data in China and the United States.
"A combination of soaring energy prices, a stronger dollar, and continued concern about the macro economic outlook in light of rising inflationary pressures, all combined to trigger the selloff," said MF Global's Ed Meir.
A pair of trade balance reports from the world's two largest economies dented sentiment.
The US trade deficit rose to a seven-month high in January as imports from China surged and oil prices rose, overwhelming a solid gain in exports.
China posted an unexpected trade deficit for February, the first gap in nearly a year as exports dramatically slowed, raising concerns that the main engine of global economic growth was faltering.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months sank to $9,163.25 a tonne from $9,935 a week earlier.
Three-month aluminium decreased to $2,547 a tonne from $2,612.
Three-month lead dipped to $2,417 a tonne from $2,638.
Three-month tin fell to $29,700 a tonne from $31,750.
Three-month zinc slipped to $2,271.50 a tonne from $2,491.25.
Three-month nickel tumbled to $26,112 a tonne from $28,900.
COCOA: Prices tumbled on profit-taking, after striking the highest points for more than 30 years the previous week on the back of political turmoil in leading producer Ivory Coast.
"The fact that the world's largest cocoa producer, Ivory Coast, is on the verge of a civil war has largely slipped under the radar," said Barclays Capital analyst Sudakshina Unnikrishnan said Friday.
"President Laurent Gbagbo has been resisting international pressure to stand down following the November 28 elections, which the UN insists were decisively won by his opponent Alasane Ouattara."
The head of the United Nations Operation in Ivory Coast (ONUCI) said that the end of the country's crisis over a disputed presidential election "will arrive sooner than foreseen".
Choi Young-jin did not elaborate, but he also suggested that incumbent leader Gbagbo might have lost control of his troops.
By Friday on LIFFE, cocoa for May sank to £2,207 a tonne from £2,414 a week earlier.
On NYBOT, cocoa for delivery in May slumped to $3,383 a tonne from $3,766 a week earlier.
SUGAR: The sugar market weakened in line with other commodities and the stronger dollar.
"With other markets in retreat and the dollar also rebounding, sugar has followed," noted Sucden analyst Nick Penney.
By Friday on the New York Board of Trade (NYBOT), the price of unrefined sugar for delivery in May dipped to 28.53 US cents a pound from 30.62 cents a week earlier.
On LIFFE, London's futures exchange, the price of a tonne of white sugar for May decreased to £717.60 from £759.30 a week earlier.
GRAINS AND SOYA: Prices drifted lower after reaching recent multi-year high points.
By Friday on the Chicago Board of Trade, May-dated soyabean meal -- used in animal feed -- fell to $13.36 a bushel from $14.14 a week earlier.
Maize for delivery in May dipped to $6.68 a bushel from $7.28.
Wheat for May decreased to $7.26 from $8.32.
COFFEE: Prices extended their impressive run to hit another post-1977 high point in New York, as trade was driven by stretched global supplies, before some light profit-taking ahead of the weekend.
"Coffee prices have risen to a fresh 34-year high this week underpinned by tight Arabica supplies and low inventories," said Barclays Capital analysts.
By Friday on NYBOT, Arabica for delivery in May eased to 276.20 US cents a pound from 277.30 cents a week earlier.
On LIFFE, Robusta for May rose to $2,423 a tonne from $2,403 a week earlier.
RUBBER: Malaysian rubber prices sank as dealers took to the sidelines on anticipation that prices will decline further.
The Malaysian Rubber Board's benchmark SMR20 fell to 449.20 US cents per kilo, from 520.40 cents last week.
© 2011 AFP