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Copper nears 8-month lows
2006-12-22
ICE Brent for February delivery added 11 cents to $62.57 a barrel in late afternoon trade in London. Brent prices rose 1.5 per cent this week. February West Texas Intermediate rose one cent to $62.67 in mid-morning trade on the New York Mercantile Exchange. February WTI slipped 1.2 per cent on the week. Relatively mild weather in the key US heating oil consuming region ofthe Northeast of the US, at the start of the winter season has curbed gains in oil and petroleum product prices. Heating demand was forecast to average below normal over the next five days, with the six-to-10-day forecast for temperatures to average above normal, private forecaster DTN Meteorlogix said. US heating oil futures were 0.45 cents down at $1.6972 a gallon. The copper price was close to eight month lows yesterday as the red metal neared the end of the year on a downward slope having led the industrial metal price rally in the first half of the year. The three-month copper price touched an intra-day low of $6,325 a tonne on the London Metal Exchange, $5 above the eight month low reached on Thursday. Copper prices have fallen 28 per cent from their record high of $8,790 seen in May, but remain 45 per cent above their year ago level. The fall in copper prices is largely due to increased copper inventories at warehouses registered with the LME. Copper stockpiles doubled in 2006, and are now at levels last seen in April 2004 when prices were around $3,000 a tonne. Robin Bhar, metals strategist at UBS, said three-month copper prices had fallen by $135 a tonne, but the LME December 2010 price had gained $35 a tonne this week. He added that the December 2010 price had risen 82.9 per cent, or double the rate of increase in the three-month price, this year. "Long-dated copper prices have continued to outperform as players - largely hedge funds and investors - bid up the back-end of the forward curve with the result that the December 2010 price has been able to consolidate a move above $5,000 a tonne," he said. Nickel prices continued to hover near record highs. The three-month LME nickel price gained 3.5 per cent to $33,450 a tonne yesterday, about three per cent below its record peak of $34,950 reached last week. Nickel prices are up about 140 per cent this year. In the bulk commodities markets on Friday, there were further agreements between steelmakers and iron ore producers over the price of iron ore for the year starting April 1. Rio Tinto, said it has agreed a lump and fine ores price rise of 9.5 per cent with China's Baosteel, for iron ore deliveries. The deal mirrors the price agreement between Baosteel and Brazil's CVRD that was announced on Thursday. In precious metals, gold was marginally higher at $619.00/$620 a troy ounce, compared with the late quote of $618.20/$619.20 in New York on Thursday. Gold prices are up about one per cent this week, and about $100 on the year. Slovenia's central bank has agreed to join the Central Bank Gold Agreement, the pact that limits bullion sales by European central banks. Slovenia, which joins the eurozone in January, holds only 5.1 tonnes of gold, according to World Gold Council figures, and itsaddition will not affect sales limits agreed under the pact. Under the agreement, 15 European central banks agreed to cap sales at 2,500 tonnes between 2004 and 2009, or 500 tonnes a year. In the year to September 2006, sales fell about 100 tonnes short of the limit. Oil prices edged higher on Friday after Statoil of Norway said it will cut production from its Kvitebjoern gas and condensate field by half to about 95,000 barrels of oil equivalent per day to ensure safety and better reservoir management.
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