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Source: FT
Date: 06/26/2007 00:00
Oil prices retreated on Tuesday but maintained a hold above the $70 level after unions in Nigeria ended a general strike which began last week as a protest against government plans to raise domestic fuel prices.
ICE July Brent fell 53 cents to $70.83 a barrel while Nymex August West Texas Intermediate lost 42 cents at $68.76 a barrel.
The end of the strike eases concerns about possible disruptions to supplies from the world’s eighth largest crude exporter. However, about 711,000 barels a day of oil production in Nigeria remains suspended due to attacks by militants.
Traders attention turned to the next set of US inventories data, due for release on Weednesday, for an update on the US refning system and the outlook for gasoline supplies over the summer months when demand peaks.
US refinery utilisation is running 7.5 per cent below its five-year average and problems are ongoing with several refineries in Texas reporting production losses over the weekend.
A preliminary poll of analysts by Reuters suggested refinery utilsation rose 1.1 percetnage points to 88.7 per cent and this should help ghasoline stocks increase by 1.1m barrels.
Crude stocks were expected to have risen by 0.9m barrels after last week’s huge increase of 6.9m barrels, well above the consensus market forecast. Some of that increase in crude stocks was due to oil being delivered from offshore storage facilities.
Copper traded at $7,430 a tonne, supported by labour unrest in Latin America. Sub-contractors at Codelco, the world’s largest copper producer, blocked roads and set fire to buses close to mines, demanding higher wages and improved working conditions.
Codelco says it does not employ the 30 thousand sub-contractors and has refused to meet their demands. Traders said the dispute was among the worst labour problems faced by the industry which could take weeks to resolve and could rapidly spread to smelters hitting refined output.
“The market is not fully aware of the degree of the troubles in Chile and coupled with the onset of the slower summer demand period, this helps to explain the muted (price) response, “ said Robin Bhar at UBS: “Global inventories remain low and there is not an adequate cushion against supply shocks so production problems (such as Codelco’s) tend to flow straight through into higher prices.”
Lead hit a new record at $2,730 a tonne before easing back to $2,690 a tonne amid continuing conserns about tight supplies. lead’s record breaking run has attracted large speculative inflows as the grey metal has become the latest darling of the hedge fund community.
Gold traded at $649.35 a troy ounce, amid continuing concerns about the outlook for global interest rates.
“There are distict signs of nervousness about the interest rate outlook,” said Stephen Briggs at Societe Generale: “The opportunity costs of holding gold in a rising interest rate environment increase.”
Platinum fell to $1,277 a troy ounce amid a lack of news from South Africa regarding contract negotiations between unions and precious metals producers.
James Steel of HSBC said the lack of news may have led some long investors to liquidate positions and take profits.

