AfkInsider Commodities Report: Brent Crude Climbs On Libyan Export Slump

AfkInsider Commodities Report: Brent Crude Climbs On Libyan Export Slump

Oil prices, particularly for Brent North Sea crude, moved up this week, supported by fresh disruptions to Libyan oil supplies.

Brent crude for delivery in December touched $110.16 a barrel on ICE Futures Europe on Oct. 30, its highest level in a week, before closing at $109.86. The contract had started the week at $106.93 a barrel.

Libyan crude exports are reported to have plummeted to 90,000 barrels a day, around 10 percent of capacity as labor unrest and political protests halted operations at some of the country’s oilfields and ports. Libyan crude output was disrupted some months ago after strikes and protests forced terminals to shut. The North African country was producing between 1.5-1.6 million barrels a day of crude oil before the shutdowns.

U.S.  crude prices, which touched a four-month  low late last week, initially also found some support from the Libyan oil outages. U.S. benchmark West Texas Intermediate (WTI) for December delivery climbed to an intraday high of $98.62 a barrel on the New York Mercantile Exchange (Nymex) on Oct. 28. Late last week, the December WTI had slipped to $95.95, its lowest level since June.

However, U.S. crude prices resumed their downward path after reports of another big rise in U.S. crude inventories which reinforced worries about weakening oil demand in the world’s largest oil-consuming country. The December WTI fell to an intraday low of $96.59 a barrel before settling at $96.77 on Oct. 30, after the release of the latest oil report from the U.S. Energy Information Administration (EIA).  The U.S. agency said the country’s commercial oil stocks had risen by 4.1 million barrels in the week ending Oct. 25, the sixth straight week of increases. At 383.9 million barrels, U.S. crude oil stocks are above the upper limit of the average range for this time of year, the EIA said.

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Gold continued its climb early this week, reaching a five-week high on the Comex division of Nymex on Oct. 28. The December contract hit $1,361.80 an ounce, the highest for the most-active contract since Sept. 20. But the precious metal fell back as a rise in the U.S. dollar to a near two-week high on Oct. 31 curbed demand for gold as an alternative investment. The dollar’s rise against a basket of 10 currencies came after the U.S. Federal Reserve kept its monetary stimulus program in place and its options open for tapering its $85-billion-bond buying. The Fed’s Open Market Committee had met on Oct. 29 and Oct. 30 to consider whether to start scaling back its stimulus package.

December gold on Comex was trading at around $1,323.30 an ounce at midday on Oct. 31, down $26 on the previous day’s settlement at $1,349.30. Analysts believe the gold market is looking fragile, particularly as physical demand for gold is subdued. Demand from the world’s second-biggest buyer, China, has waned as a result of the higher prices. Demand from the biggest buyer, India, looks uncertain.

Platinum prices moved higher again amid a threat of strikes looming across South Africa’s platinum mining sector. Around three-quarters of the world’s platinum production comes from the country. Platinum for delivery in January had moved up to settle at $1,479.90 an ounce on Nymex by finish at midweek while sister metal palladium closed at $749.50 an ounce, basis the December contract.

Among industrial metals, copper initially was boosted by expectations that the U.S. Fed would leave its monthly bond-buying program intact. The red metal for delivery in three months time on the London Metal Exchange (LME) touched a one-week high of $7,299.50 a tonne on Oct. 30, before closing at $7,280.

However, copper slipped the following day on a strong U.S. dollar after the U.S. Fed’s latest policy outlook was less dovish than some analysts and market watchers had expected.  Growing copper supply and weak demand also weighed on prices. Three-month copper on the LME had eased back to $7,240 a tonne in late afternoon trading on Oct. 31.

Soft commodities sink

Meanwhile, among soft commodities, cotton futures continued to lose ground as favorable weather in the key cotton-growing states in the U.S. is expected to boost the pace of the harvest in the world’s top cotton producing and exporting country. India, the second-biggest grower, anticipates a record crop. Simultaneous to the prospect of increased supplies, demand remains relatively weak, despite the lower prices.

Cotton for delivery in December on ICE Futures U.S. slumped to 77.84 cents a pound by close on Oct. 30, its lowest level in 10 months. The December contract had fallen to 78.81 cents a pound on Oct. 25, before closing at 79.08 cents.

Ample global supplies continue to weigh on coffee futures, with arabica coffee in New York recording fresh four-and-a-half year lows this week. Arabica for December delivery on ICE Futures U.S. fell to $1.0528 a pound in midday trade on Oct. 31, the lowest for a spot contract since March 2009 and 1.5 percent down on the previous day’s finish at $1.0693. The December contract had closed last week at $1.0910 a pound.

Raw sugar futures were also lower after running up to a one-year high on Oct.16 after a fire destroyed nearly 180,000 tonnes of sugar in Brazil’s key sugar-exporting port, Santos. Prices have since slipped amid easing concerns over disruption to supplies from the top exporting country after sugar and ethanol trader Copersucar, owner of the six warehouses damaged in the fire, reported the shiploaders and other sugar-loading equipment at its terminal were undamaged.

Raw sugar for delivery in March settled at 18.39 cents a pound on Oct. 30, some 3.4 percent down on last week’s close at $19.03 cents and 8.8 percent below the 20.16-cents-a-pound high seen following first reports of the Santos fire.

Refined, or white, sugar futures were also weaker. After rising to $513.80 a tonne, basis the December contract, on NYSE Liffe in London in the wake of the port fire, by midweek this week, December refined sugar had fallen back to settle at $485.10 a tonne on Oct. 30.

Cocoa futures continued to ease back this week amid speculation that global supplies will rise as the harvest gathers pace in West Africa, which typically accounts for about 70 percent of world cocoa output. Prolonged dry weather earlier this year sparked concerns about the impact on the quantity and quality of beans from Côte d’Ivoire and Ghana’s main crops in particular this season.

By midweek, December cocoa on ICE Futures U.S., was down to $2,666 a tonne by close. The contract had hit a fresh two-year high of $2,780 a tonne on Oct. 22, boosted by anticipation of a global deficit. In London, March cocoa on NYSE Liffe had moved down to £1,687 a tonne by midweek, compared with £1,700 a week earlier.

While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author can accept no responsibility for any errors or any consequence arising from the information provided.