Oil rises above $80,

Wednesday, 11 November 2009 09:57

LONDON: Oil prices rose on Tuesday to above $80 a barrel after a late-season hurricane disrupted oil and gas output in the Gulf of Mexico and the dollar stayed close to a 15-month low. US crude for December delivery was up 92 cents to $80.35 a barrel by 1525 GMT, after trading most of the session below yesterday s close of $79.43. London Brent crude was up $1.01 at $78.78. Hurricane Ida, the first real weather threat to oil production of the 2009 season, was downgraded to a tropical depression on Tuesday, but output remained curtailed as producers awaited its passage out of the Gulf. Ida shut in 29.6 per cent of oil production and 27.5 per cent of gas output from the Gulf of Mexico, the US Minerals Management Service said on Monday. Traders said other reasons for oil s gains were the dollar s ongoing weakness, which has also spurred gold to record highs above $1,100 an ounce. We ve held onto the hurricane gains, but the strength in gold above $1,100 and the weak dollar are the reasons we haven t come down more, said Christopher Bellew, a broker at Bache Commodities. The dollar rose on Tuesday from a 15-month low, but analysts said the trend of dollar weakness was still in place, potentially providing support for dollar-denominated commodities.

Looking to the long term, the International Energy Agency published its annual World Energy Outlook on Tuesday, forecasting a rise in primary energy demand globally by 1.5 per cent every year until 2030, and calling for $26 trillion in investment to meet the expected demand. Market reaction to the report was negligible because the annual report is a projection on the basis of a scenario, trying to look 20 years out, Harry Tchilinguirian, senior oil analyst at BNP Paribas, said. Long term it s an important guideline, but any reactions in oil short-term will be on dollar moves, equity markets and central bank decisions, he said. Market-wise, the big issue is how commodities are being targeted by investors looking for yield as a result of accommodative monetary policy, Tchilinguirian said. The latest snap shots on near-term fundamentals will come from US inventory data. Analysts predicted US crude oil inventories last week rose slightly because of higher imports, according to analysts polled by Reuters late on Monday. Industry group the American Petroleum Institute (API) will release weekly inventory data later on Tuesday, while a report from the US Energy Information Administration (EIA) will be delayed from Wednesday to Thursday due to a federal holiday on November 11. Oil prices have more than doubled from a low of less than $33 touched in December, although they are still barely half their high of more than $147 a barrel touched in July last year. The catalyst for this rally has been, in our view, long-anticipated signs of improvement in oil fundamentals in the context of generally constructive economic data, analysts at Goldman Sachs wrote in their Commodity Watch note to investors. Strong emerging market demand has pulled supply elsewhere, reducing US petroleum imports. Specifically, Chinese oil demand continues to surge, driven by strong economic activity.

Gold continues to climb, now at Rs34,755 a tola

Wednesday, 11 November 2009 09:57

KARACHI: Amid expectations that gold may jump further, the precious metal reached Rs34,755 a tola, taking a Rs255 leap in a day on Tuesday. The opening rate for the local market on Tuesday was Rs34,600 as compared to Rs34,500 on Saturday, which later rose to Rs34,755 by the time businesses shut here in the city. This is so far the highest level in the history of gold. This swift rise is said to have been caused by bulk buying of gold by Sri Lanka, besides India and China who have bought from the IMF, said Haji Haroon Chand, President of All Sindh Saaraf and Jewellers Association. A number of countries are diversifying their foreign exchange reserves and moving away from the weakening dollar to gold. In the local markets, the rate for 10 grams of gold jumped to Rs29,790 from Rs29,575, scoring a Rs215 rise in a day. In the international market, an ounce of gold was priced at $1,104, up from $1,095 in a day, which is expected to rise further, said Chand. However, as the rate of the precious metal goes up, local dealers see a further decline in business as the buying power keeps on falling day-by-day amid an economic downturn in the country. In London, gold prices rallied toward recent record highs above $1,110 an ounce on Tuesday, reversing earlier losses, as the dollar erased initial gains against a basket of six major currencies, adds Reuters.

Spot gold hit a session high of $1,109.20 an ounce and was at $1,106.90 at 1540 GMT, against $1,103.85 late in New York on Monday. The market earlier dipped as low as $1,096.60. The metal also found support from renewed investor interest after the International Monetary Fund announced last week it had sold 200 tons of gold to India s central bank, which prompted the metal to reach record highs. Given all the noises hedge funds have been making, plus all the noise surrounding further potential central bank buying, it is difficult to see much of a downside, said Societe Generale analyst David Wilson. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange firmed $5.90 to $1,107.30 an ounce. The precious metal hit an all-time high of $1,110.85 an ounce on Monday as the dollar index, which measures the US currency s performance against a basket of six others, hit its lowest since August 2008. Gold initially struggled to break new ground as the dollar edged up on Tuesday, but bounced back as the currency slipped back towards 15-month lows against a currency basket. Strength in the US unit dampens gold s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. The dollar remains susceptible to further losses, analysts said. My feeling is we will actually see the dollar break down further in the next few weeks, and that will help take gold up to new levels, said Standard Chartered analyst Daniel Smith. We think $1,200 is quite a realistic target before the end of the year.

Sugar crisis to create medicine shortage

Wednesday, 11 November 2009 09:57

KARACHI: Former chairman FPCCI Standing Committee on Pharmaceuticals, Dr Mushtaq Noorwala, while expressing concern over the continuing crisis of sugar in the country, has cautioned that the pharmaceutical industry and other industries using sugar as raw material will be severely affected.

If availability of sugar at a low price is not ensured for the pharmaceutical sector, there will be a shortage of medicine which will create serious problems, especially for the common man. Besides, a large number of people engaged with this industry will be rendered jobless, he said in a statement. Dr Noorwala regretted that despite the directives of the Supreme Court of Pakistan and the government s stance about availability of huge stocks of sugar, the commodity is sold at an unbearably high price and is not easily available to the public. He suggested that sugar can be sold by hawkers also to save the people from standing in long queues before utility stores. He was of the opinion that some elements, by creating an artificial crisis of sugar or wheat flour, were actually defaming and creating trouble for the government. He appealed to the consumers of soft drinks, ice creams, sweets, confectionery, etc, to cut their consumption for saving sugar.