Oil prices gain on rising fears over Syria escalation

Workers of South Oil Company perform maintenance work at the Rumaila oil field in Basra Province, Iraq (file). Although Syria is not a major oil producer, traders are nervous about a broader conflict in the region, including neighbouring Iraq, which is becoming a major exporter.

AFP/London

Oil prices won support last week from fears of a US-led military strike against Syria, while commodity market traders reacted also to uncertainty over the timing of the Federal Reserve’s stimulus tapering.

US President Barack Obama and Russian counterpart Vladimir Putin failed on Friday to end their bitter dispute over US plans for military action in Syria, as half of the G20 called for a “strong” response to a chemical weapons attack blamed on the regime.

The US signalled that it had given up on securing Moscow’s support at the UN on the crisis, as Putin reiterated a warning that it would be “outside the law” to attack without the UN’s blessing.

Also occupying traders’ minds was news of disappointing US jobs growth in August, according to government data Friday.

The economy added 169,000 jobs in August, the Labor Department reported, fewer than the 177,000 expected by analysts.

The unemployment rate ticked down a tenth of a point to 7.3%, the lowest rate since December 2008.

Many analysts said the weak August jobs report would not discourage the Fed from tapering its $85bn a month asset-purchase programme, known as quantitative easing, as soon as its September 17-18 monetary policy meeting.

But some hinted that Friday’s jobs data could delay the process.

“Weaker than expected US labour market data casts doubt on (the) timing of taper,” said Katie Evans, economist at the Centre for Economics and Business Research in London.

OIL: Crude futures built on the previous week’s strong gains as traders continued to plough money into crude on the back of escalating tensions over Syria.

Teoh Say Hwa, head of investment at Phillip Futures in Singapore, said the initial expression of support from Congress for a US-led attack had increased the likelihood of military action.

This has raised concerns “that the unrest may spread in the Middle East region, which accounts for a third of the world’s crude, and disrupts oil supplies”, she told AFP.

New York crude had struck $112.24 a barrel the previous week, which was the highest level since early May 2011.

At the same time, Brent oil soared to $117.34 a barrel, last seen in late February.

Although Syria is not a major oil producer, traders are nervous about a broader conflict in the crude-rich Middle East region, including neighbouring Iraq, which is becoming a major exporter.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in October climbed to $116a barrel from $114.74 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September grew to $110.16 a barrel, from $108.02.

PRECIOUS METALS: The price of gold fell slightly over the week despite winning support from tensions over Syria.

By late Friday on the London Bullion Market, the price of gold fell to $1,387 an ounce from $1,394.75 a week earlier.

Silver slipped to $23.05 an ounce from $23.64.

On the London Platinum and Palladium Market, platinum dipped to $1,498 an ounce from $1,527.

Palladium dropped to $699 an ounce from $741.

BASE METALS: Base or industrial metals were mixed amid Syria and US data.

Price falls among certain metals are “due primarily to the generally higher risk aversion among market players, the Syrian conflict in particular continuing to weigh on sentiment”, noted analysts at Commerzbank.

By Friday on the London Metal Exchange, copper for delivery in three months rose to $7,135 a tonne from $7,111.75 a week earlier.

Three-month aluminium fell to $1,817 a tonne from $1,820.

Three-month lead dropped to $2,145.25 a tonne from $2,162.

Three-month tin gained to $22,675 a tonne from $21,150.

Three-month nickel increased to $13,933 a tonne from $13,864.

Three-month zinc slipped to $1,887.75 a tonne from $1,905.25.

COCOA: Futures hit one-year highs as tight supply worries returned to the market.

By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March stood at £1,675 a tonne compared with £1,639 for the December contract a week earlier. On New York’s NYBOT-ICE exchange, cocoa for December climbed to $2,561 a tonne from $2,468 a week earlier.

COFFEE: Prices climbed as a weaker dollar lifted demand.

By Friday on NYBOT-ICE, Arabica for delivery in December grew to 117.80 US cents a pound from 117.45 cents a week earlier.

On LIFFE, Robusta for November increased to $1,773 a tonne from $1,757.

SUGAR: Futures rallied on the prospect of supplies being less abundant than thought.

“The surplus in sugar is nothing like as large as it is assumed to be,” broker Czarnikow said in a note to clients. “In fact, what we believe has happened is that the (recent) fall in price and increase in affordability have been enough to encourage a sharp rise in... demand,” it added.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October climbed to 16.77 US cents a pound from 16.36 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for October jumped to $492.30 from $474.50.

RUBBER: Prices rose in key market Malaysia.

The Malaysian Rubber Board’s benchmark SMR20 climbed to 245.70 US cents a kilo from 241.85 cents the previous week.