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Crude oil hit a record high above $92 a barrel on Friday, driven higher by fresh geopolitical tensions in the Middle East, tight market fundamentals and increased options-related buying.
Nymex December West Texas Intermediate hit a peak of $92.22 a barrel before easing back to trade 85 cents higher at $91.28, up 3 per cent this week.
With Turkey threatening military action against Kurdish militants in northern Iraq, Middle East tensions were further inflamed by news of a new round of sanctions against Iran by the US government. Iran is the second largest producer in the Organisation of the Petroleum Exporting Countries.
Although Opec insists the market remains well supplied, there are indications that the cartel has already started to ship more crude ahead of its planned supply increase of 500,000 barrels a day from November 1.
However, Opec’s supply assessment was undermined by a huge fall of 5.3m barrels in US crude inventories, announced on Wednesday, which provided hedge funds with fresh impetus to drive prices higher.
China, the world’s second largest oil consumer, complained about high oil prices at the start of its meeting with Opec this week, the first for two years.
Sam Bodman, the US energy secretary, called on Opec to raise production, and pressure for action is clearly mounting ahead of the cartel’s November meeting.
ICE December Brent hit a high of $87.30 before easing back to trade 32 cents higher at $87.80 a barrel, up 4.8 per cent this week.
Gold rose 1.7 per cent to $778.10 a troy ounce this week, touching a fresh 28-year high of $781.90 in the process, amid renewed dollar weakness and concerns about inflation.
Speculators have built a record long position in gold in New York, betting on further price gains. This has increased concerns about the possibility of a price correction if speculators decide to take profits.
However, John Reade at UBS noted “resolute buying” each time gold prices have come under pressure recently, which could be due to a producer buy-back, over-the-counter investment or sovereign buying.
Platinum rose 0.9 per cent this week to a record $1,454 a troy ounce, supported by supply disruptions in South Africa following a spate of mining deaths.
Mining operations are to be shut after fatal accidents pending investigations by South Africa’s Department of Minerals and Energy, and supply deficit is expected in the market this year as a result of output losses.
The Baltic Dry index, which tracks the cost of shipping dry bulk commodities, continued its record-breaking run. It smashed through the 11,000 level to 11,025 – up 2.1 per cent this week – supported by robust demand for iron ore and coal from China.