SINGAPORE: Brent oil prices rose on Wednesday, March 2 towards $116 a barrel, silver hit a 31-year peak and gold traded less than half a percent from its record, as more regimes in North Africa and the Middle East looked vulnerable to spreading protests.
Demand for safe-haven investments such as gold has surged along with oil prices, which were near last week's 2-1/2 year high, as Libya stands on the brink of a civil war and protests intensified in Yemen, Iran and Oman.
"If the contagion gets a little bit out of hand in Saudi Arabia or Iran, the results are not positive for equities and not positive for inflation. It's an event that everyone is trying to avoid," said Jonathan Barratt, managing director of Commodity Broking Services.
Libya could descend into civil war unless Muammar Gaddafi quits, the United States said on Tuesday, as pressure heightened on the longtime leader after news of Western military preparations.
Unease also spread to top oil exporter Saudi Arabia after human rights activists said authorities had detained a Shi'ite cleric, sparking fears of sectarian strife, while in Iran, which produces around 4.7 percent of the world's oil, there were reports that protesters clashed with security forces.
These fears kept U.S. NYMEX Crude oil above $100 a barrel and Brent crude around $4 away from last week's 28-month high.
"If it continues to spread, Middle East tensions may reach a point where a war could start and that could ignite an incredible rally (in oil prices)," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
By 0621 GMT Brent crude oil traded 42 cents higher at $115.84 a barrel, after hitting an intraday high of $116.36. U.S. crude climbed 49 cents to $100.12, after closing the previous session at its highest level since September 2008.
Investors worry that costlier oil could drag on the economic recovery, but Federal Reserve Chairman Ben Bernanke said on Tuesday the surge was unlikely to hurt the U.S. economy unless it was sustained, even as investors sold off equities on fears of a slowdown.
Gold also benefited from the geopolitical problems in the Middle East and North Africa.
Spot bullion hit an intra-day high of $1,434.45, just 20 cents below the record high hit in the previous session. It had since edged lower and quoted at $1,429.85.
Spot silver struck $34.74 an ounce, its highest since early 1980. It was trading at $34.55 by 0614 GMT.
Most other markets steady to weaker.
U.S. wheat futures lost more ground, falling 0.2 percent, as rains in China's wheat belt and forecasts for much-need moisture in the U.S. Plains weighed. Corn and soybean futures also dipped in early Asian trade.
The wheat acreage in China affected by a drought in eight provinces has fallen by two-thirds since Feb. 8 to 2.52 million hectares (6.2 million acres), the Ministry of Water Resources said this week.
Three-month copper on the London Metal Exchange reversed early losses to $9,870 a tonne, up $10 from the previous close.
In addition to energy price worries, slowing Chinese growth may also keep copper in check in the near term.
"There is further short-term weakness in copper. There are two sources of fundamental weakness. The first is scrap supply, where the best indicator is spot treatment and refining charges where we are not seeing signs of falling," said Alan Heap, analyst at Citigroup.
"The other bear point is that there is plenty of inventory in bonded warehouses and in other unreported locations. It's important to know who has this stock and what their game plan is. One thing is clear; it's not in the hands of fabricators."
Heap said the market's performance would depend on where fabricators went to restock -- to the Shanghai Futures Exchange, through imported bonded warehouse stocks held by merchants, or from other metal held by speculators away from the exchange. - Reuters
Demand for safe-haven investments such as gold has surged along with oil prices, which were near last week's 2-1/2 year high, as Libya stands on the brink of a civil war and protests intensified in Yemen, Iran and Oman.
"If the contagion gets a little bit out of hand in Saudi Arabia or Iran, the results are not positive for equities and not positive for inflation. It's an event that everyone is trying to avoid," said Jonathan Barratt, managing director of Commodity Broking Services.
Libya could descend into civil war unless Muammar Gaddafi quits, the United States said on Tuesday, as pressure heightened on the longtime leader after news of Western military preparations.
Unease also spread to top oil exporter Saudi Arabia after human rights activists said authorities had detained a Shi'ite cleric, sparking fears of sectarian strife, while in Iran, which produces around 4.7 percent of the world's oil, there were reports that protesters clashed with security forces.
These fears kept U.S. NYMEX Crude oil above $100 a barrel and Brent crude around $4 away from last week's 28-month high.
"If it continues to spread, Middle East tensions may reach a point where a war could start and that could ignite an incredible rally (in oil prices)," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
By 0621 GMT Brent crude oil traded 42 cents higher at $115.84 a barrel, after hitting an intraday high of $116.36. U.S. crude climbed 49 cents to $100.12, after closing the previous session at its highest level since September 2008.
Investors worry that costlier oil could drag on the economic recovery, but Federal Reserve Chairman Ben Bernanke said on Tuesday the surge was unlikely to hurt the U.S. economy unless it was sustained, even as investors sold off equities on fears of a slowdown.
Gold also benefited from the geopolitical problems in the Middle East and North Africa.
Spot bullion hit an intra-day high of $1,434.45, just 20 cents below the record high hit in the previous session. It had since edged lower and quoted at $1,429.85.
Spot silver struck $34.74 an ounce, its highest since early 1980. It was trading at $34.55 by 0614 GMT.
Most other markets steady to weaker.
U.S. wheat futures lost more ground, falling 0.2 percent, as rains in China's wheat belt and forecasts for much-need moisture in the U.S. Plains weighed. Corn and soybean futures also dipped in early Asian trade.
The wheat acreage in China affected by a drought in eight provinces has fallen by two-thirds since Feb. 8 to 2.52 million hectares (6.2 million acres), the Ministry of Water Resources said this week.
Three-month copper on the London Metal Exchange reversed early losses to $9,870 a tonne, up $10 from the previous close.
In addition to energy price worries, slowing Chinese growth may also keep copper in check in the near term.
"There is further short-term weakness in copper. There are two sources of fundamental weakness. The first is scrap supply, where the best indicator is spot treatment and refining charges where we are not seeing signs of falling," said Alan Heap, analyst at Citigroup.
"The other bear point is that there is plenty of inventory in bonded warehouses and in other unreported locations. It's important to know who has this stock and what their game plan is. One thing is clear; it's not in the hands of fabricators."
Heap said the market's performance would depend on where fabricators went to restock -- to the Shanghai Futures Exchange, through imported bonded warehouse stocks held by merchants, or from other metal held by speculators away from the exchange. - Reuters
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