LONDON - Commodity prices diverged this week as traders reacted to a mixed outlook for the global economy, while oil futures were also impacted by Middle East supply worries.

OIL: Oil prices fell having endured a roller-coaster ride.

Brent crude futures slumped by four dollars a barrel on Thursday following a report, later denied, that the United States and Britain had agreed to supply the market with crude reserves.

The White House confirmed the issue was discussed by US President Barack Obama and British Prime Minister David Cameron, but denied that there was a pact.

"Oil has been rebounding since that denial," Victor Shum, an analyst at Purvin and Gertz energy consultants, told AFP.

The week's trading also saw investors weigh concerns over Middle East supply disruptions and a surge in US crude oil stockpiles.

"Market participants have a difficult task on their hands trying to balance significant risks to future supplies with a fairly downbeat demand growth outlook for the year," said Andrey Kryuchenkov, analyst at Russian financial group VTB Capital.

Figures released Wednesday by the US Department of Energy (DoE) showed crude stocks were at a nine-month high after rising 2.5 million barrels last week. A rise in crude inventory is seen as a sign of weakening demand.

The DoE in the weekly report said total products supplied to the market over the past four weeks were down 5.4 per cent from a year ago, with unseasonably warm weather continuing across much of the country.

Meanwhile, continued tensions between crude producer Iran and the West remain a key concern for traders.

Iran this week condemned what it said was the use of oil as a political tool against producers, referring to Western sanctions over its controversial nuclear programme.

Tehran has repeatedly said its nuclear activities are exclusively peaceful.

The International Energy Agency (IEA) on Wednesday forecast that Iranian oil exports would fall by 800,000 barrels per day after mid-2012.

The IEA said Iran's exports would decline to around one million bpd, while global demand for oil grows by 800,000 bpd to 89.9 million bpd.

The United States and the European Union have in the past four months ramped up economic sanctions on Iran in a bid to force it to suspend uranium enrichment, the most sensitive part of its nuclear programme.

Iran had warned in December that it would blockade the strategic Strait of Hormuz -- a key transit route for global oil supply -- if the West imposes further punitive measures.

"The situation with Iran is likely to get worse before it gets better," said Jason Schenker of Prestige Economics, predicting prices would head higher over the coming months.

"Saudi Arabia is cranking out production" to replace lost Iran crude supplies, he said.

"But spare capacity is becoming increasingly limited, and inventories could fall globally."

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in May stood at to $124.83 a barrel compared with $125.95 for the expired April contract the previous week.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for April dropped to $106.23 a barrel from $107.91 the previous week.

PRECIOUS METALS: Gold prices hit a two-month low at $1,634.53 an ounce, while platinum's value surpassed the yellow metal for the first time since September.

"In the wake of the US Federal Reserve's meeting and the resulting firm US dollar, gold came under considerable pressure," said Commerzbank analysts in a note to clients.

The US Federal Reserve on Tuesday held interest rates at record lows on and upgraded its view of the world's biggest economy, saying the jobs market and consumer and business spending had improved since January.

Gold tends to profit from economic uncertainty in the United States as the precious metal is viewed as a safe haven. A stronger dollar meanwhile generally hits demand for commodities priced in the US unit as it makes them more expensive for buyers using rival currencies.

By late Friday on the London Bullion Market, gold dropped to $1,658 an ounce from $1,687.50 the previous week. Silver fell to $32.27 an ounce from $33.87.

On the London Platinum and Palladium Market, platinum increased to $1,677 an ounce from $1,655. Palladium grew to $703 an ounce from $690.

BASE METALS: Base metals prices mostly rose as upbeat US economic data offset fears of a Chinese slowdown.

"While the Fed's generally upbeat tone helped reinvigorate the base metals complex, there is no doubt that the main price driver for the group remains China," said Ed Meir, an analyst at financial services group INTL FC Stone.

"Here, it is obvious that things are slowing down in the country, in some cases quite dramatically." Concerns over China's demand for raw materials were meanwhile stoked after customs data showed the economy swung to a trade deficit of $31.48 billion in February.

The deficit -- which is the largest for at least 12 years -- comes as demand continues to falter in China's key US and European export markets.

By late Friday on the London Metal Exchange, copper for delivery in three months jumped to $8,648 a tonne from $8,490 the previous week.

Three-month aluminium increased to $2,274 a tonne from $2,229. Three-month lead dipped to $2,137 a tonne from $2,159.

Three-month tin climbed to $23,800 a tonne from $23,000. Three-month nickel advanced to $19,221 a tonne from $19,100.

Three-month zinc grew to $2,102 a tonne from $2,087.

COCOA: Prices dropped on the prospect of bumper harvests in Ivory Coast and Ghana.

"Rainfall in West Africa could result in a higher interim harvest in the most important growing region for cocoa, which increases the probability of another market surplus in the current crop year," said Commerzbank analyst Carsten Fritsch.

He added: "According to the Ghana Cocoa Board, Ghana's cocoa production this season could surpass even last year's record one-million-tonne harvest thanks to improved weather conditions."  By Friday on LIFFE, London's futures exchange, cocoa for delivery in May slid to £1,432 a tonne from £1,534 a week earlier.

In New York on the NYBOT-ICE, cocoa for May decreased to $2,175 a tonne from $2,373.

COFFEE: New York Arabica coffee prices struck a 17-month low at 181.05 cents a pound on expectations of a strong Brazilian harvest.

By Friday on NYBOT-ICE, Arabica for May fell to 185.40 US cents a pound from 188.75 cents.

On LIFFE, Robusta for delivery in May dropped to $2,040 a tonne from $2,066 a week earlier.

SUGAR: Sugar futures surged to a four-month high at $675 a tonne.

"Sugar prices rallied (....) mainly due to concerns surrounding short-term supply tightness," said Barclays Capital analyst Kate Tang.

By Friday on LIFFE, the price of a tonne of white sugar for May soared to $670.40 from $631.30 the previous week.

On NYBOT-ICE, the price of unrefined sugar for delivery in May jumped to 25.57 US cents a pound from 24.02 cents a week earlier.

GRAINS AND SOYA: Prices rose on strong demand.

By Friday on the Chicago Board of Trade, maize for delivery in May firmed to $6.72 a bushel from $6.54 a week earlier. Wheat for May increased to $6.68 a bushel from $6.38.