LONDON, May 1, (AFP): Commodity prices diverged this week as investors reacted to the Greek debt crisis that has affected major financial markets, traders said.
There was meanwhile a record high for cocoa prices owing to strong demand and tight supplies.
Oil: Oil prices rose over the week after a topsy-turvy week amid uncertainty over a Greek bailout.
Prices sunk at the start of the week on heightened concerns about a Greek financial crisis after its debt was slashed to junk status, fanning fears of a default.
The oil market was “sharply pressurised by rising concerns over Greece’s debt problems”, said analysts at Barclays Capital. A fierce global equities sell-off began Tuesday after ratings agency Standard & Poor’s (S&P) cut Greek debt to junk, while a downgrade to Portugal also stoked concerns about a widening eurozone crisis.
Crude futures recovered late in the week as fears about Greece eased.
Greek Finance Minister George Papaconstantinou said Friday that his country, the EU and IMF are “very close to a positive agreement” on a three-year financial rescue package for the debt-crippled country.
“We are very close to a positive agreement,” Papaconstantinou told an annual conference organised by British magazine The Economist.
“We hope in the coming days to be able to wrap up the whole negotiations so that we can announce basic elements of the programme and the financing mechanism,” he said.
In other news affecting energy market sentiment, the White House indicated that new domestic offshore oil drilling will be on hold until the investigation of a Gulf of Mexico disaster is complete.
Oil from a giant Gulf of Mexico slick washed ashore in Louisiana on Friday, threatening an environmental calamity as the government mulled sending in the military to combat what officials called a national disaster.
With up to 200,000 gallons of oil a day spewing into the Gulf of Mexico from a ruptured well, the accident stemming from a sunken offshore rig may soon rival the Exxon Valdez disaster as the worst oil spill in US history.
British energy giant BP said it was “taking full responsibility” for the oil spill, adding it would pay for “legitimate claims” stemming from the disaster.
Company spokeswoman Sheila William told AFP the energy firm was ready to assume costs related to the cleanup and to reimburse damages.
BP is “taking full responsibility for the spill and we will clean it up and where people can present legitimate claims for damages we will honor them,” she said.
On London’s Intercontinental Exchange, Brent North Sea crude for June delivery climbed to $87.03 compared with $86.22.
Precious Metal: Gold prices reached the highest level this year at $1,181.75 an ounce.
Silver gained to $18.62  an ounce from $17.89.
On the London Platinum and Palladium Market, platinum rose to $1,738 an ounce from $1,725.
Palladium dipped to 552 dollars an ounce from $555.
Base Metals: Base metals prices fell across the board “as on-going uncertainties over the Greek debt situation and potential contagion effects weighed on broad market sentiment”, said Barclays Capital analyst Nicholas Snowdon.
Three-month aluminium dropped to $2,207 a tonne from $2,312.
Three-month lead slid to $2,205 a tonne from $2,300.
Three-month tin eased to $18,125 a tonne from $18,990.
Three-month zinc retreated to $2,282 a tonne from $2,407.
Three-month nickel declined to $25,700 a tonne from $26,930.
Grains And Soya: Maize prices rose while soya and wheat retreated.
July-dated soyabean meal — used in animal feed — fell to $9.98 from $10.10.
Wheat for July dropped to $4.97 a bushel from $5.05.
Cocoa: Cocoa prices struck a record high $2,404 a tonne.
Additionally, “the main producing country, Ivory Coast, has reported a decline in the main crop of 2.8 percent, year-on-year, though this has already been foreseeable for weeks”.
On the NYBOT, the July cocoa contract increased to $3,231 a tonne from $3,186.
Coffee: Coffee prices diverged.
By Friday on LIFFE, Robusta for delivery in July dropped to $1,319 a tonne from $1,325 the previous week.
On the NYBOT, Arabica for July climbed to 135.30 US cents a pound from 131.60 cents.
Sugar: Sugar prices slid to a one-year low of 14.81 cents a pound.
On LIFFE, London’s futures exchange, the price of a tonne of white sugar for August dropped to 466.50 from 488.50 pounds for the May-expired contract.
Rubber: Malaysian rubber prices slid owing to a stronger local currency and weak demand from China ahead of a national holiday, according to dealers.
The Malaysian Rubber Board’s benchmark SMR20 dropped to 320.25 US cents a kilo from 334.45 cents the previous week.
Commodities rallied broadly Friday after the government reported that consumer spending helped lift the economy in the first three months of the year.
Gold prices also rose as the euro strengthened against the dollar. A weaker dollar makes commodities cheaper for foreign investors, since most commodities are priced in dollars. The ICE Futures US dollar index, which measures the dollar against six other currencies, fell 0.20 percent.
Investors shied away from riskier assets earlier in the week, largely over fears Greece might default on its debt. Analysts say investors are becoming more willing to take on risk following Friday’s upbeat report on gross domestic product in the US and apparent progress toward resolving Greece’s debt crisis.
Oil rose above $86 on the GDP report and on growing concerns that a spill in the Gulf of Mexico will affect supply. Oil rose 98 cents to settle at $86.15 per barrel on the New York Mercantile Exchange.
The government said gross domestic product grew by 3.2 percent from January to March. It was the biggest improvement in consumer spending in three years.
Greek Prime Minister George Papandreou said new austerity measures are needed along with bailout loans for country’s survival. Greece has been under pressure to rein in its spending as a condition of receiving a package of bailout loans. A deal will allow Greece to pay debts coming due May 19.
Greece, the European Union and the International Monetary Fund are expected to complete talks this weekend over what extra steps Athens needs to take as part of the rescue deal. A default in Greece could threaten the euro, a currency shared by 16 European nations, and jeopardize the continent’s recovery.
Adam Klopfenstein, a senior market strategist with Lind-Waldock, said gold is still benefiting from the dollar’s weakness.
“People want to be in something tangible,” Klopfenstein said, noting that, “The Greek package looks like it might be a little bit stronger.”
Gold and silver rose. Gold for June delivery rose $11.90 to settle at $1,180.70 an ounce on the New York Mercantile Exchange.
Silver for July delivery rose 6 cents to settle at $18.639 an ounce.
Platinum for July delivery jumped $11.40 to settle at $1,745.10 an ounce. Palladium for June delivery added $6.75 to settle at $555.75 an ounce. All three metals trade on Nymex.
Copper for July delivery 0.3 cent to settle at $3.3535 a pound.
In other Nymex trading in May contracts, heating oil rose 3.73 cents to settle at $2.2885 a gallon, and gasoline gained 4.07 cents to settle at $2.3963 a gallon. Natural gas lost 6 cents to settle at $3.920 per 1,000 cubic feet.
In agricultural commodities, wheat for July delivery rose 7.5 cents to settle at $5.03 a bushel. Corn rose 6.25 cents to settle at $3.7525 a bushel.
Soybeans for July delivery rose 3 cents to settle at $9.99 a bushel.