Oil prices ended higher but off their peaks on Friday after Saudi Arabia let it be known that it had raised production by around 8% to (to above 9 million barrels per day) make up for a near halt in Libyan exports.
The leaked news of the Saudi production increase forced oil back down from around $US120 a barrel in London on Thursday and over $US103 a barrel in New York.
The Financial Times and Reuters were told of the increase (to get the news out to global markets as quickly as possible early Friday).
Comments from the International Energy Agency supported the Saudi leak, adding to the impact of the news.
So Brent prices in London ended around $US112.14 a barrel, up 78c on the day. That was a gain of 9.4% for the week
In New York West Texas Intermediate ended up 60c at $US97.88 a barrel.
The price of the expiring March WTI contract jumped 14%. The April contract became the front month on February 24.
The news flow from Libya over the weekend won’t hearten traders with more shootings reported and violence in and around Tripoli, which seems to be the last major part of the country still held by Colonel Gaddafi.
Libyan production has been cut by more than 1 million barrels a day, according to some market reports. But the IEA said output was down by at least 850,000 barrels.
Libya, which pumps 1.6 million barrels of oil a day, is the ninth-largest producer among the 12 members of OPEC, shipping most of its crude and fuels to Europe. It has the biggest reserves in Africa.
International Energy Agency figures show that Saudi Arabia has 3.5 million barrels a day of spare capacity, while the United Arab Emirates could add 330,000 barrels, Qatar could put on 180,000, and Kuwait 230,000.
Middle East production is still 1.7 million barrels a day lower than it was at the height of the oil price spike in mid-2008.
But China and India are consuming more oil now than in 2008, so the margin for safety isn’t as big as the raw figures suggest.
Gold futures eased Friday from the seven-week highs the day before.
News about the Saudi move sent oil prices lower and a slight move higher by the US dollar prompted some traders to take the short term profits.
Comex gold for April delivery fell $US6.50, or 0.5%, to $US1,409.30 an ounce in New York, the first fall in eight trading sessions.
Gold rose 1.5% on the week.
Comex March silver shed 27c, or 0.8%, to $US32.90 an ounce, leaving it 1.9% higher by Friday.
Both metals fell as oil prices dipped.
Meanwhile, copper and other metals more closely tied to industrial activity traded higher Friday.
Copper for March delivery rose 11c, or 2.5%, to $US4.44 a pound.
That cut the week’s fall to just 0.9%.
And while this was going on, the rally in agricultural commodity prices resumed in the US markets.
The trigger was the release by the US Department of Agriculture on Friday of its first detailed balances of supply and demand for the 2011-12 crop season.
The report pointed to strong prices for the next year at least, despite forecasts of a bumper crop for corn and soyabeans.
As a result, corn prices again rose near to 30 month highs, while wheat and cotton both jumped more than 4.5%.
“The 2011-12 outlook for major grains and oilseeds in the US reflects a tight overall supply situation,” the USDA said at the department’s annual outlook forum meeting. (Australia’s outlook conference for all commodities will be held in Canberra in 10 days time.)
March corn on the Chicago Board of Trade rose 3.6% to $US7.105 a bushel, once again closing in on the peak of $US7.65 touched in June 2008.
CBOT March wheat, which was down 15% by Wednesday, jumped 4.8% on Friday to $US7.8325 a bushel, while CBOT March soyabeans gained 3.3% to $US13.615 a bushel.
Among other agricultural commodities, ICE March sugar in New York rose 3.5% to 31.27 USc a pound while ICE March cotton was up 5.1% to $US1.905 a pound.
