Crude oil and metals march higher
Javier BlasPolitical trouble in Africa, strikes in Latin America and optimism about global economic growth boosted prices for oil and base metals this week.
Agriculture commodities were volatile, with wheat, corn and soyabean suffering sharp price swings, while cocoa hit a four-year high amid unrest in a key producing country.
On the base metals market, strikes for Latin America producers pushed copper prices to an eight-week high of $7,888 a tonne. London Metal Exchange copper closed the week 3.7 per cent higher at $7,840 a tonne. Lead rose to an all-time high to close 7.4 per cent higher on the week at $2,857 a tonne. Aluminium ended the week flat.
Cocoa hit a four-year high on fears of unrest in Ivory Coast, the world’s largest producer, after an attack against Guillaume Soro, the country’s prime minister.
London September cocoa rose 1.4 per cent on the week to close at £1,106 a tonne.
Soyabeans ended the week strongly, rising $14 cents to $8.20 a bushel.
Biofuel demand has changed plantation patterns, provoking wild gyrations in wheat, corn and soyabean prices.
US farmers have increased their acreage dedicated to corn to the highest levels since 1944. But they cut soyabean’s acreage from last year by 15 per cent, according to Barclays Capital estimates.
The United Nation’s Food and Agriculture Organisation and the Organisation for Economic Cooperation and Development this week warned of higher food prices because of increasing consumption of agricultural commodities by the biofuels industry.
“Growth in the use of agricultural commodities as feedstock to a rapidly increasing biofuel industry is one of the main … reasons for international commodity prices to attain a significantly higher plateau,” the organisations said in a report.
Crude oil prices yesterday surged above $76 a barrel, the highest level in 11 months, on renewed unrest in the Nigeria’s oil producing region and the impact of earlier production cuts by the Organisation of the Petroleum Exporting Countries.
ICE August Brent hit $76.01 a barrel, just below the all-time high of $78.65 a barrel. It later eased back to trade 84 cents higher at $75.61 a barrel.
Nymex August West Texas Intermediate rose 75 cents to $72.56 a barrel yesterday.
US petrol inventories are 4 per cent below last year’s level and analysts warn further declines are likely.
Opec has so far resisted calls from Western countries to increase its production to ease high prices. Low US petrol inventories prior to an anticipated surge in demand during the summer holiday season provided additional support for oil.
Analysts warned that more oil price increases were likely as the Nigerian militant group responsible for most of the attacks in the country’s oil industry have called off a one-month truce. Attacks by militants have cut about 25 per cent of Nigeria’s oil production.