Oil
World oil prices dipped in the London market on expectations of warmer weather in the US, the world’s biggest consumer of energy. New York’s main contract, light sweet crude for delivery in February, eased eight cents to 58.08 dollars per barrel in electronic trading on December 28.
In London, the price of Brent North Sea crude for February delivery dipped two cents to 56.27 dollars per barrel. Crude futures remained under pressure from the mild US weather lowering demand for heating oil, analysts at the Sucden brokerage firm said. Prices were weighted down also by crude output returning to normal in Nigeria after a pipeline attack in Africa’s biggest oil producer last week, they added.
Temperatures in the US northeast region, the world’s largest consumer of heating fuel, were meanwhile expected to rise further above normal levels by the end of the week, according to weather forecaster Metcorlogix. Elsewhere, the US National Weather Service has predicted the mild temperatures to remain through to March. Amid such weather conditions, some analysts said there appeared to be sufficient energy supplies to meet demand during the northern hemisphere winter.
The US reserves of crude have increased by 12.4 per cent over the last year, while stockpiles of heating fuel are up 11.1 per cent, according to the US Department of Energy.
The US crude stocks have risen to 322.5 million barrels. However, in a reflection of colder US weather distillates stocks, including also diesel fell 2.8 million barrels to 127.7 million — more than triple analysts’ forecasts of an 800,000-barrel drop. Gasoline (petrol) inventories decreased 300,000 barrels to 204.1 million barrels, compared with predictions of an increase of one million barrels.
Meanwhile, amid falling prices, Opec’s second biggest producer, Iran wants the oil cartel to cut its output ceiling by one million barrels per day at its next meeting on January 31. Opec’s production ceiling currently stands at 28 mbd.
World oil prices eased on December 30 on profit-taking ahead of the New Year but held on to the astonishing 40 percent gains made over the course of 2005, dealers said. New York’s main contract, light sweet crude for delivery in February, receded 47 cents to $59.85 per barrel in pit dealing. In London, the price of Brent North Sea crude for February delivery declined 19 cents to $57.88 per barrel in electronic trading.
Crude futures had hit historic high prices in late August following the devastation wrought by Hurricane Katrina on US Gulf Coast energy installations, striking $70.85 per barrel in New York and $68.89 in London. That marked a 70 per cent jump between January and August, but prices have since pulled back owing largely to mild weather across the northern hemisphere in the run-up to winter.
Copper
Copper prices rose to a fresh record on December 28, on fears of supply disruption as workers at the world’s biggest producer prepared to go on strike unless pay demands were met. Contract workers at Chile’s Codelco, which holds almost a fifth of world copper reserves, postponed the proposed action as their representative prepared to meet government officials. The contract workers were asking for a bonus to bring their compensation in line with higher-paid union workers.
Three-month copper on the London Metal Exchange rose as high as $4,512 a ton, a new record, before slipping back to $4,483, up 0.7 per cent since the previous close on December 23. This seems to have crept in on us with little warning, and copper prices could move substantially higher if the strike proceeds, said Man Financial in a research note.
Gold
Gold moved sharply higher as the precious metal’s attractiveness as a haven from uncertainty increased after a so called inversion of the US bond yield curve prompted a nervous session on Wall Street. Sport gold was trading at $516.50 an ounce, up $8.90 on December 28. Also gold prices gained strength after the World Gold Council said it expected physical buying of the metal to remain strong. Traders expect the bullion to challenge the 24½ year high of $540.90 within the next few weeks.
There was also evidence that governments were increasing their gold reserves. The Russian central bank announced earlier in the week that its gold and foreign currency reserves had hit a record $173 billion. Meanwhile, the Russian website Neftegaz.com claimed that China was coming under pressure to reduce its foreign exchange risks by increasing its gold reserves. Platinum and Palladium:
The price of platinum rose slightly, but was below its recent 25 year high, while palladium price fell. Platinum had reached above 1,000 dollar per ounce in November, its highest level for 25 years.
On the London Platinum and Palladium Market, an ounce of platinum firmed to 961 dollars per ounce at the morning fixing on December 23, from 959 dollars the previous week. Palladium eased to 253 dollars per ounce, from 261 dollars.
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