Crude oil futures touched record highs on Friday because of strong demand for petrol and increased geopolitical nervousness following North Korea’s missile tests this week.
August West Texas Intermediate peaked at $75.78 a barrel in early morning trade on the New York Mercantile Exchange, exceeding the previous record of $75.35 set on April 24. However, by late morning trade the WTI contract was struggling to hold on to its gains, trading at $75.40 a barrel, up 26 cents on the previous close, which equates to a 2 per cent rise on the week.
Traders are pricing in further gains in WTI prices with June WTI 2007 being quoted at $78.30 on Friday.
IPE Brent crude for August delivery broke through the $75 a barrel level for the first time, on its way to hitting a peak of $75.09 a barrel. By late afternoon trade in London, August Brent was 69 cents higher at $74.77 a barrel, equating to a 1.6 per cent rise on the week.
Robert Laughlin, senior energy broker at Man Financial, said the North Korean missile crisis would have a knock-on effect on US and European Union efforts to reign in Iran’s nuclear ambitions.
“The oil market thrives on security of supply, and when the geopolitical environment becomes more tense, we see a premium in the oil price because people are worried that this [nuclear issue] could lead to supply disruptions,” Mr Laughlin said.
He also pointed out that oil prices were being supported by increasing demand. The US department of energy reported the seventh consecutive four-week, year-on-year rise for US petrol demand.
“In spite of the higher price, it has not deterred people from filling up their SUVs or cars,” said Mr Laughlin.
Metal prices were also stronger this week as investors were attracted by tight supply and demand balances in key metal markets including copper, nickel and zinc.
Copper prices gained about 6 per cent, touching a two-month high of $7,885 a tonne on the London Metal Exchange, before trading at $7,750 in late trade, down $130 from the previous close. Copper has now risen 22 per cent since mid-June but is still about $1,000 below the record high of $8,790 reached on May 11.
This week’s rise has reflected a continued fall in copper stockpiles at LME registered warehouses, with supplies falling short of expectations due mainly to mine strikes.
Nickel reached a record high of $24,100 a tonne on the LME on Friday, before slipping to $23,900 a tonne. The price of nickel, which is mainly used in stainless steel, rose by 12 per cent this week as LME nickel inventories fell to critically low levels.
Gold prices rose 3 per cent this week as the precious metal extended its rebound after touching a three-month low in mid-June.
Gold was quoted at $631.20/$632.00 a troy ounce, which was down about $1 on the day.
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