MENAFN - Khaleej Times
Oil drops on easing tensions over Syria and Iran
(MENAFN - Khaleej Times) Global oil prices sank last week on receding tensions over Iran and Syria, while coffee struck another three-year low on the back of plentiful supplies, dealers said.
Sentiment was also hit by the US budget impasse, with lawmakers unable to reach agreement over a budget just days before a deadline kicks in that could see parts of the federal government shut down.
New York crude futures slid as the United States and Russia agreed a draft UN Security Council resolution on destroying Syria's chemical arms, easing Middle East supply worries.
Washington and Moscow agreed a draft UN Security Council resolution on Thursday on destroying Syria's chemical weapons.
The development breaks a prolonged deadlock over the country's bitter conflict, which has rocked the oil market in recent weeks.
Prices were also pushed lower by a thaw in relations between the West and Iran.
A meeting between US Secretary of State John Kerry and his Iranian counterpart on Thursday has raised hopes of an easing of Western sanctions against Tehran over its nuclear programme.
Such a move would allow the major Opec producer to export oil more freely.
"Crude oil prices have continued to remain under pressure with the prospect we could well see a third successive negative week for prices as geopolitical concerns continue to diminish," said CMC Markets analyst Michael Hewson.
"The prospect of a UN resolution that is agreed by all, on the subject of Syrian chemical weapons, has calmed fears about a supply pinch." Oil had surged late last month in anticipation of Western military strikes on Syria, with New York crude striking the highest level since May 2011.
"Oil prices have fallen back ... as the US and Russia have now agreed on a draft UN resolution," added analyst Lucy Sidebotham at energy consultancy Inenco.
"And now the US are in talks with Iran to resolve their issues over Tehran's nuclear scheme, the geopolitical risks to oil supply have been reduced and we could expect prices to fall further."
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in November fell to 108.49 per barrel from 109.05 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for November dropped to 102.87 per barrel from 105.59 for the expired October contract a week earlier.
Gold prices dipped on easing demand for the safe-haven metal, but losses were capped by worries over next week's potential US government shutdown.
"In the US, negotiations in Congress are going down to the wire as an agreement to renew the Federal government's spending authority must be reached on Monday at the latest if a shutdown is to be averted," said Capital Economics analyst Jessica Hinds.
"Either way, safe-haven assets such as US Treasuries and gold are likely to stay in demand while equities should remain under pressure.
"Even if an agreement over the Federal spending authority is reached, this would still leave the even bigger worry for investors that the debt ceiling must be raised before the Treasury runs out of money some time shortly after October 17."
By late Friday on the London Bullion Market, the price of gold dipped to 1,341 an ounce from 1,349.25 a week earlier.
Silver slipped to 21.61 an ounce from 22.74.
On the London Platinum and Palladium Market, platinum fell to 1,416 an ounce from 1,447.
Palladium declined to 725 an ounce from 726.
Base or industrial metals saw mixed fortunes, but some won support before the national holiday next week in key consumer China.
"Prices are somewhat firmer as the week comes to an end," said Commerzbank analysts in a research note to clients.
"Following a week relatively bereft of data, next week will see the publication of more relevant data again.
"That said, the Chinese markets will be closed from Tuesday for 'Golden Week', which suggests that we will see a below-average trading volume."
By Friday on the London Metal Exchange, copper for delivery in three months slid to 7,287.25 per tonne from 7,346 a week earlier.
Three-month aluminium climbed to 1,835.25 a tonne from 1,827.
Three-month lead grew to 2,111 a tonne from 2,105.
Three-month tin gained to 23,430 a tonne from 23,285.
Three-month nickel decreased to 13,955 a tonne from 14,370.
Three-month zinc advanced to 1,914 a tonne from 1,900.
Prices forged fresh multi-year low points as sentiment was dogged by speculative selling and the prospect of solid output from key producer Vietnam.
"Futures were lower on speculative selling," said Price Group analyst Jack Scoville.
"Selling was tied to ... wire stories highlighting the potential for very strong production in Vietnam this year.
"The harvest there is about to start, and some industry sources in Europe told the wires that production could be as high as 29 million bags.
"The Vietnamese government estimates production at 25 million bags, and private sources in Vietnam have estimated production as high as 27 million bags."
By Friday on NYBOT-ICE, Arabica for delivery in December rose to 115.60 US cents a pound from 115.25 cents a week earlier.
On LIFFE, Robusta for November eased to 1,647 a tonne from 1,680.
The cocoa market found a stable footing, one week after striking one-year peaks on tight supply forecasts.
"Rains have returned to West Africa. Ideas are that crop conditions there are generally improving," added Scoville.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in December edged down to 1,703 a tonne from 1,705 a week earlier.
On New York's NYBOT-ICE exchange, cocoa for December firmed to 2,617 a tonne from 2,615 a week earlier.
The sugar market diverged in muted trading conditions.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in March increased to 18.03 US cents a pound compared with 17.73 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for December fell to 484 from 486.50.
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