COPPER
AT NEW PEAK, OIL NEAR HIGH...
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LONDON
(Reuters) - Metals resumed their
relentless climb on Wednesday,
with copper notching another
price record and with precious
metals at multi-year highs as
oil held near its peak on
jitters over Iran's nuclear ambitions.
Spot
gold <XAU=> rose to a 25-year
peak of $626.75 an ounce as high
oil prices fuelled inflation
fears and a weaker dollar
further lifted interest in
bullion. The precious
metal has risen 20 percent since
the start of this year.
Silver <XAG=> rose to $14.27, its
highest in 23 years, while
platinum hovered
just below its record high.
"We have seen oil shocks in the past
but we don't yet know how bad
this crisis will be", said
a manager at a European pension
fund with exposure to
commodities, referring to
tensions over Iran. "It
looks like, if things do go
badly (in Iran), the price upside is unlimited.
We did not want to invest in
indexes that are heavily
weighted toward oil, but we may
consider playing the oil market
more actively", he said.
U.S. oil held within sight of its
record high above $71 a barrel
on Wednesday as dealers feared Iran's intensifying dispute with the
West over its nuclear aims might
lead to supply cuts from the
world's fourth-largest exporter. U.S. May crude oil
futures traded at $70.96 a
barrel by 1249 GMT after hitting
a record high of $71.60 the
previous day. A sharp
rally in gasoline prices has
also helped to lift oil by more
than $10 over the past four
weeks, with investors focusing
on the worsening conflict over Iran's atomic program -- and more
recently the prospect of U.S. military action.
Most
commodities indexes, which have
attracted the bulk of the
speculative investment in the
market, are heavily weighted
toward oil.
More Gains for Copper
The copper price showed little sign
of stalling, breaching the key
technical point of $6,500 per
tonne to reach another record
high, while aluminium hit a
17-1/2-year peak. Metals
futures contracts have been
heavily bought by fund managers
diversifying into commodities
from traditional assets. "I have never seen anything
like this, more and more people
are piling in. People did not
know what commodities were a
year ago", an LME trader
said.
Copper prices have gained almost 50
percent this year, buoyed by
tight global stocks and
continuing supply worries amid
strong global demand and
relentless fund buying, while
shares in copper miners have
also rewarded investors. Three-month LME copper hit a new high of
$6,545 a tonne, though it
slipped to $6,440/6,450 in early
afternoon kerb trading.
By 1240 GMT copper producers
Kazakhmys (KAZ.L) traded at 1222
pence, up 51 percent since the
start of the year and Antofagasta (ANTO.L) at 2411, up 26 percent. By contrast, the FTSE index of
100 leading shares <.FTSE>,
which includes companies in all
sectors, was up around 8 percent.
In other base metals, aluminium
<MAL3> also advanced to
$2,772 per tonne, it's highest
since August 1988. Lead
<MPB3>, a metal widely
used in plumbing, was the
speculators' latest target,
traders said. It rose 3
percent to $1,233 in early trade,
but was still well under the
high of $1,435 hit in the first
quarter of this year.
Oil Supply
There've been no major oil discoveries
anywhere in the world in over 35
years. And all those great oil
discoveries are in decline.
Supply is going down. And even if we
have economic slowdown, unless
somebody discovers a lot of oil
very quickly, in a very
accessible area... you know, if
you find a huge oil field in Berlin or Tokyo or somewhere, it'll have an
effect. But supplies are
going down in all this stuff,
and that's why I'm so optimistic
on commodities.
Jim Rogers 2005
Crude Oil
For all of 2006, the global oil
situation remains tight with
projected supply at 85.1 million
barrels per day and demand at
85.2 million barrels per day.
There are plenty of potential
problems ahead, starting with Iran's defiance of U.N. inspectors. Russia's oil industry has a fragile
relationship with the government
after Yukos was gutted and sold. Iraq's oil industry is crippled by
frequent attacks. Nigeria's oil industry contends with
serious problems of civil unrest. Venezuela
's oil production is struggling
and President Chavez wants more
customers outside of the U.S. In the meantime, the extent of China's appetite for oil is unknown
and the world economy continues
to grow.
Continued steady world oil demand growth,
combined with only modest
increases in world spare oil
production capacity, and the
continuing risks of geopolitical
instability, are expected to
keep crude oil prices high.
U.S. Department of Energy's Short-term
Energy Outlook. March 7, 2006.
Opec warns of Russian oil export slowdown
A recently filed lawsuit against
Yukos, once one of Russia's
biggest energy companies, is
threatening to further slow the
growth rate of oil exports from
the world's second largest
producer, the Organisation of
the Petroleum Exporting
Countries warned on Friday.
Russia's
oil supply, much of which is
consumed internally, is expected
to average 9.6m barrels a day in
2006, about 11 per cent of the
world's total demand.
Financial Times Published: March 17 2006
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2007