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London commodities

Oil slips after Opec meeting

LONDON: Oil prices fell slightly following a keenly-awaited meeting of leading producer nations who agreed to modestly increase their output, but sought to ensure against a sharp price decline.

On the International Petroleum Exchange (IPE) in London, a barrel of Brent was selling for 25.08 dollars on Friday afternoon compared with 26.06 dollars a week ago.

Nine of the 11 members of the Organisation of Petroleum Exporting Countries (Opec) announced in the early hours of Wednesday that they would increase output by 1.45 million barrels a day.

Iraq was excluded from the agreement because it has been counted out of Opec quotas since a UN oil embargo was set in place following the Gulf War.

Iran refused to sign the agreement on principle. Anxious about the effects of any price fall on its fragile economy, Iran had repeatedly called on the producers' club to resist calls for more oil from the world's largest importer, the United States.

However, Iran later announced that it would nevertheless increase its production from April to preserve its national interests, although it did not specify the volume.

Non-Opec producers Mexico and Norway also said they would increase their output.

Saudi Arabia's Oil Minister Ali al-Nuaimi, who led the calls from within Opec for raised output, said he backs a price of 25 dollars a barrel, adding that Opec could review its production quotas from July 1 following an extraordinary session to be held on June 21.

"When barrel prices pass 25 dollars, people start to look for alternative energy sources. When it goes up even further, there is a risk of inflation and non-growth of the world economy, which has repercussions on us and is prejudicial to us," al-Nuaimi said.

He said Opec had taken the decision to meet again on June 21, "not only to reduce production if prices fell, but also to increase it if prices are high."

Following the meeting, it was also reported that Opec had reached a "gentleman's agreement" to set a price band of between 22 and 28 dollars a barrel, according to Algeria.

The United States, in full electoral swing, campaigned forcefully for Opec to increase its output by more than two million barrels a day.

US President Bill Clinton on Wednesday hailed the Opec decision as "good news for our economy and the American consumer."

He added: "These increases should bring lower prices, which will help sustain economic growth here in America and, also and very importantly, throughout the world."

From black gold to gold, the precious metal fell sharply this week, following a report that the Bank of France Ñ which previously had resisted the trend to sell off reserves Ñ would auction part of its stash.

GOLD: Gold prices fell sharply on fears that the French central bank could decide to sell some of its bullion reserves following a report in French newspaper Le Monde.

The cash price on the London Bullion Market fell to 276.10 dollars an ounce from 285.30 dollars a week earlier.

On Thursday, the price of gold fell to as low as 275 dollars. That level was the lowest since the end of September, just before an announcement by 15 central banks that they would not add to planned sales of gold for the next five years.

Bullion analysts said a French auction would flout last year's agreement and pointed out that the Bank of France would not necessarily have been involved in a preliminary discussion, so a denial did not carry much weight.

A French sale would also be particularly devastating because, unlike other European central banks, the French Central Bank had consistently said it would not sell its gold reserves.

SILVER: Silver prices fell sharply to their lowest levels for nine months, against the backdrop of increased production and stagnating demand. Cash prices fell to 4.94 from 5.10 dollars an ounce.

PLATINUM and PALLADIUM: The two sister metals traded in narrow mars in a cautious market still awaiting signs of resumed supplies from Russia Ñ the world's biggest exporter of palladium and the second-biggest platinum producer.

The nation has in theory resumed exports after a protracted freeze. Palladium prices fell to 605 dollars an ounce from 645 dollars last week. Platinum prices fell to 480 dollars from 485.

BASE METALS: Base metals generally lost ground this week on the London Metal exchange (LME) after a quiet week and as the softening of oil prices also had a knock-on effect on metal.

However, analysts said dwindling stocks should halt falls. Three-month nickel prices on the LME fell 110 dollars to 10,020 dollars a tonne.

Stocks were 31,446 tonnes compared with 32,220 tonnes last week. Copper fell 36 dollars to 1,761 dollars a tonne. Aluminium prices fell by 47.5 dollars to 1,549.5 dollars a tonne. Zinc shed 18 dollars to 1,116 dollars. Lead crept up 0.5 dollars to 453 dollars a tonne. Tin slipped 110 dollars a tonne to 5,345 dollars.

OIL: Oil prices slipped lower after Opec effectively restored production levels to their year-earlier level. The aim is to stabilise prices that had climbed to nine-year highs of more than 30 dollars a barrel in recent weeks.

Immediately after the meeting, in London the price of Brent North Sea crude for May delivery slipped below the 25 dollars a barrel threshold for the first time since the middle of January.

By Friday, it had crept higher to 25.09 dollars on the International Petroleum Exchange, but was still below last week's level of 26.06 dollars.

In New York, the price of benchmark light sweet crude for May delivery was trading at 26.70 dollars late Thursday compared with 27.31 dollars a week earlier.

After days of intense debate, Opec announced early Wednesday that nine members of the 11-nation body had signed an accord effectively undoing a round of production cuts implemented a year ago.

Under the accord the production of the "Opec nine" has been raised to 21.069 million barrels a day, representing an increase of 1.452 million barrels per day.

Other no-Opec oil producers also said they would raise output. Mexico promised another 150,000 barrels a day, while Norway pledged a further 100,000.

The United States loudly welcomed the decision, although analysts were more circumspect, saying they did not expect a sharp fall, as Opec had made clear that it wanted stable prices, rather than significantly lower prices.

Moreover, demand remains very high and stocks have fallen to their lowest levels for a decade.

RUBBER: Rubber prices rebounded slightly this week as dealers anticipated the dry season in Southeast Asia could reduce supply.

The London rubber index ended the week at 482 pounds per tonne (for May delivery) compared with 487 pounds at the end of last week.

In Kuala Lumpur, the RSSI index stood at 2.66 ringgit per kilo from 2.65 ringgit last week.

COCOA: Cocoa prices fell back sharply this week against the backdrop of world overproduction.

In London, may contracts were selling at 577 pounds a tonne compared with 625 pounds a week earlier.

The world's largest producer, Ivory Coast, said Thursday it is to abolish its privatised coffee and cocoa regulator, blamed by producers for low prices.

However, the government did not specify when the regulator would be abolished or what would replace it.

In New York in February, prices fell to a 27-year low of 569 pounds a tonne and the London-based International Cocoa Organisation last week called for action to revive the market.

COFFEE: Coffee prices varied on international exchanges in the run-up to a meeting next week of the Association of Coffee Producing Countries in London that will consider a Brazilian plan to reduce world coffee exports and boost low prices.

In London, Robusta (for May delivery) fell to 973 dollars compared with 982 dollars a tonne at the end of last week.

In New York, Arabica (for July delivery) rose to 106.05 cents a pound from 104.85 a week earlier.

TEA: Demand improved at the Mombassa tea auctions in Kenya, although prices were uneven, according to the London Tea Brokers Association.

BP1 (Broken Pekoe) rose by up to 11 cents, while PDust leaves gained by up to 45 cents.

SUGAR: International sugar prices again rose this week on a market dominated by technical factors.

August contracts on the London market ended the week at 179.4 dollars a tonne compared with 176.6 dollars last week.

In New York, July contracts rose to 5.50 cents a pound from 5.46 cents.

VEGETABLE OILS: US soya prices rose this week following forecasts that rain in US growing regions would be less than previously thought.

On the Chicago Board of Trade (CBoT), a bushel of soya for May delivery rose to 5.37 dollars from 5.22 dollars.

On Friday, the US Department of Agriculture announced it would devote a record 30.3 million hectares (74.84 million acres) to soya culture this year, up from 29.86 a year earlier.

CEREALS: Cereals had mixed fortunes this week, after weather forecasters predicted there would be less rain in US production regions than earlier thought.

In Chicago, a bushel of wheat (27.2 kg, for May delivery) fell to 255.50 cents from 256.25 cents the week before.

Maize rose to 233.25 cents a bushel (of 25.4 kg, for March delivery) from 230.25 cents.

In London, a tonne of wheat rose to 74.30 pounds (for March delivery) from 71.50 pounds.

On Friday, the US Agriculture Department reported it would dedicate around 24.95 million hectares to wheat in 2000 compared with 25.42 million hectares last year.

This would be the smallest wheat-growing area since 1973, the agriculture department said.

It added there should be 31.52 million hectares for maize, compared with 31.34 million hectares last year.

Turning to stocks, wheat stocks had slipped back by 2.6 percent on March 1 compared with the year earlier level, while maize fell 1.6 percent.

COTTON: Cotton prices fell back this week in calm trading in the United States.

In New York, May contracts fell to 57.57 cents a pound from 59.04 cents the week before.

Cash prices covered by the Cotton Outlook index were unchanged at 58.00 cents a pound.

WOOL: High-grade Australian wool again rose, with the Eastern index rising 18 cents to 682 Australian cents per kilo.

Auctions only last two days, demonstrating limited supplies, which boosted prices.

In Britain, the Wooltops index was unchanged at 280 pence a kilo.ÑAFP