Crude oil prices eases

With the US weather forecast expecting temperate weather, especially for north-east region, heating oil prices turned weaker. Tracking the sharp decline in the heating oil, crude oil prices eased on Monday December 20, 2004. The US north-east region is the largest heating oil market in the world. The decline eroded much of previous trading days gain, which was inspired by cold weather forecasts and the broadcast of a videotape of Osama bin Laden urging militants to attack oil installations in Iraq and the Gulf. The IPE Brent contract for February delivery was 94 cents lower at US$42.45 a barrel by the close of London trading. The January Nymex WTI contract settled 64 cents lower at US$45.64 a barrel in New York. February Nymex WTI had slipped 79 cents to US$45.75 a barrel. Crude futures prices rose more than US$5 last week. January Nymex heating oil futures were 4.07 cents lower at US$1.3988 a gallon.

Meanwhile, the Centre for Global Energy Studies (CGES) said it expected the Opec basket of prices to remain above US$35 a barrel in the first quarter because of the tightness in the system. Opec reference crude basket price was last quoted at US$37.87 a barrel. However, if Opec doesn’t reduce output in the second quarter of 2005, then a heavy slide ensues that will require drastic output cuts of 2.5m b/d in the third quarter and another 1.5m b/d in the fourth quarter to prevent disaster from unfolding for Opec, the CGES said in its latest monthly report.

Gold edges higher, silver firm

Gold for February delivery rose 40 cents to end at US$444 an ounce on the Comex division of New York Mercantile Exchange (Nymex). Violence in Iraq and a fresh bout of weakness in the US dollar prompted rise in bullion prices. Also on Nymex, the March silver contract added 6.4 cents to end at US$6.852 an ounce. In the domestic bullion markets, lack of buying support led to marginal decline in gold and silver prices. Standard gold ended Rs5 lower at Rs6,410 per 10 gm. Silver too ended lower.

Base metals strengthen on weak dollar

As the dollar slipped in the currency market, the base metal future prices gathered momentum on the London Metal Exchange. Weaker dollar means cheaper prices of these metals in the consuming countries. In most cases international prices, particularly LME prices, are considered to be a benchmark for price setting. On LME, the three-month zinc price peaked at US$1,242 a ton, its highest price since December 1999, before closing at US$1,237 at the end of open-outcry trading, up US$14 on the day. Nickel, aluminium and copper also ended higher.

Global sugar summit to discuss ethanol potential

An international conference on world sugar industry and trade — The Sugar Summit 2005 — will be held in Mumbai during February 11-12 next year. Experts from India and abroad will share their in-depth views on a range of topics including global sugar market dynamics, Asian sugar alliance, imperatives for the Indian sugar industry, role of cooperatives, structured financing and risk management, innovations in sugar technology and potential of ethanol.

WITDA demands tea imports be brought under PFA Act

Western India Tea Dealers Association (WITDA in the recently held Annual General Meeting (AGM) demanded to bring Tea imported into India for re-exports under the ambit of the Prevention of Food Adulteration (PFA) Act. It has also sought a re-introduction of value-addition norms before any such consignment is re-exported. According to the association over the 25mn kg of tea is imported and it is of poor quality. Mostly, these teas are blended with domestic tea and re-exported. At the AGM, both dealers and producers expressed deep concern over the proposed categorization of tea in the 12.5% tax bracket in the ensuing value added tax regime and felt it would affect the ultimate consumer. Members of the association pointed out that milk and sugar were not heavily taxed. While milk was in fact tax free, sugar was charged only 4%.

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