LONDON - Commodity markets traded mixed this week as dealers reacted to a renewed escalation of tensions over the Russia-Ukraine crisis as well as weather factors .
Many markets began the week on Tuesday following the Easter break that had cut short also the previous week’s trading. OIL: Crude future diverged as traders weighed increased worries over the Russia-Ukraine crisis against data showing US crude stockpiles at an all-time high. “It seems that Russia’s downgrade from the credit rating S&P has dominated the equity and commodity markets today, prompting investors to lock in recent gains in the oil market,” Myrto Sokou, senior research analyst at Sucden brokers, said on Friday. Standard and Poor’s downgraded its rating of Russia’s ability to repay debt as alarm grew over the effects of the Ukraine crisis on the economy amid increased capital flight and slumping growth. Russia’s central bank also hiked interest rates by half a per centage point in a move aimed at curbing inflation which could also help limit capital flight and pressures on the ruble. Kiev meanwhile on Friday accused Moscow of seeking to trigger a “third world war” as military tensions soared in east Ukraine and US President Barack Obama led a diplomatic charge against Russia. Ukraine , a major conduit for Russian natural gas exports to Western Europe, is monitored closely by investors who are concerned also that a full-scale armed conflict will disrupt supplies and in turn send energy prices soaring.
“Renewed tensions over Ukraine between Russia and the West have triggered fresh worries about possible oil supplies issues in the region,” Sokou added. The Soufan Group, a US-based consultancy that provides strategic security intelligence services to governments and multinational firms, said Russia accounts for 34 per cent of natural gas supplies to the European Union.
Washington and its European allies supporting Ukraine’s Western-friendly government have accused Russia of fomenting unrest in the country’s east, but Moscow has denied the allegations. Away from the Eastern Europe strains, the US Department of Energy on Wednesday reported commercial crude oil stocks rose 3.5 million barrels to 397.7 million barrels for the week ended April 18.
That was the highest level of inventories since the DoE began releasing weekly data in 1982 and the highest level since 1931, according to monthly data kept by the agency. By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June nudged higher to $109.46 a barrel from $109.44 on Thursday of the previous week.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for June stood at $100.76 a barrel compared with $103.85 for the May contract on Thursday of the previous week. * Nickel shines -
BASE METALS: Prices diverged during a shortened trading week, with nickel once more the star performer. “Nickel continued to outperform the rest of the complex,” said Deutsche Bank analyst Xiao Fu. Nickel extended recent gains on Indonesia’s ban on exports of the metal that is used to make rechargeable batteries.
Indonesia in January imposed a ban on exports of mineral ore including nickel, copper and bauxite. The move is one of a series of industrial policies pushed by nationalist politicians who argue that foreign firms reap an inordinate share of the profits from exploiting resources and business opportunities in the fast-growing Indonesian economy. By Friday on the London Metal Exchange, copper for delivery in three months jumped to $6,766.25 a tonne from $6,648 on Thursday of the previous week. Three-month aluminium fell to $1,856 a tonne from $1,875.50. Three-month lead climbed to $2,162.75 a tonne from $2,143.
Three-month tin increased to $23,700 a tonne from $23,445. Three-month nickel advanced to $18,409 a tonne from $18,000. Three-month zinc dropped to $2,060.50 a tonne from $2,071.50.
PRECIOUS METALS: Prices steadied after briefly sliding to multi-month lows on Thursday.
“Gold has broken through the $1,300 barrier today as the precious metal benefitted from a flight to quality. As long as the situation in Ukraine remains tense, the metal will be in demand,” said David Madden, market analyst at traders IG.
But on Thursday, prices “were trading sharply lower first thing... as investors again showed a greater appetite for equities over the safe-haven metals after earnings results from Apple and Facebook both came in much better than expected”, noted Fawad Razaqzada, technical analyst at Forex.com trading group. By Friday on the London Bullion Market, the price of gold edged up to $1,301.25 an ounce from $1,299 on Thursday of the previous week. Silver rose to $19.66 an ounce from $19.62. On the London Platinum and Palladium Market, platinum fell to $1,418 an ounce from $1,437. Palladium advanced to $805 an ounce from $801. * Coffee prices rebound - COFFEE: Arabica-quality coffee hit a 26-month high point, supported by drought conditions in major producer Brazil. New York prices reached 219 US cents on Thursday—the highest point since February 2012. “Coffee prices have already risen by more than 80 per cent this year owing to concerns over drought conditions in Brazil and an outbreak of (plant disease) coffee leaf rust affecting Central American plants,” said Caroline Blain, analyst at Capital Economics research group. By Friday on the ICE Futures US exchange, Arabica for delivery in July climbed to 211.15 US cents a pound from 191.80 cents on Thursday of the previous week. On LIFFE, London’s futures exchange, Robusta for July gained to $2,156 a tonne from $2,086.
SUGAR: Prices rose further on expectations of a drop in Brazilian supplies. “The sugar supply from the world’s largest producer country (Brazil) is likely to prove disappointing this year, an assessment that has been confirmed by the latest forecasts from the Brazilian Sugarcane Industry Association,” Commerzbank analysts said in a note to clients. By Friday on LIFFE, the price of a tonne of white sugar for delivery in August climbed to $479 from $469.60 on Thursday of the previous week.
On ICE Futures US, the price of unrefined sugar for July gained to 17.91 US cents a pound from 17.60 US cents.
COCOA: Cocoa futures were steady for a second week running. By Friday on LIFFE, cocoa for delivery in July stood at £1,857 a tonne, unchanged compared with Thursday of the previous week.
On ICE Futures US, cocoa for July dipped to $2,973 a tonne from $2,984. RUBBER: Prices in Kuala Lumpur fell further on weak demand from top buyer China. The Malaysian Rubber Board’s benchmark SMR20 slipped to 170.85 US cents a kilo from 181.60 cents a week earlier.