Commodities - Oil tumbles, platinum outshines gold

www.forbes.com Reuters, 02.03.03, 5:14 PM ET

NEW YORK (Reuters) - Crude oil fell Monday amid rising supply from strike-hobbled Venezuela, the world's No. 5 petroleum exporter, while speculative buying took platinum to 22-year highs to overshadow less dramatic gains in gold. In other commodity trading, coffee rose amid forecasts for demand to outstrip supply, while soybeans gained on supportive data showing strong export shipments in the United States. NYMEX crude oil futures fell more than 2 percent, weighed by a warning from OPEC of a possible oversupply situation in the second quarter as Venezuela's output continued to recover. The potential for war with Iraq was not far from the minds of traders, some of whom were looking at buying into the market ahead of U.S. Secretary of State Colin Powell's appearance before the U.N. Security Council Wednesday. Powell has said that in his address he will provide "straightforward, sober and compelling proof" that Iraq is hiding banned weapons of mass destruction from U.N. arms inspectors. Iraq has denied it has such weapons. "We see Venezuela as less and less of a supportive factor, as output there has rebounded to about the halfway mark and refiners have had ample time now to make further adjustments to their mix of feeds," said Tim Evans, senior energy market analyst at IFR-Pegasus in New York. Venezuelan President Hugo Chavez said Sunday crude output increased to nearly 1.8 million barrels per day, more than half of the 3.1 million bpd pumped in November. Output hit a low of 150,000 bpd after the strike began on Dec. 2. A return of oil exports from Venezuela could pressure the OPEC oil producers' cartel to rein in output. "If there is danger of a glut, we have to meet and rectify the situation. Definitely we (OPEC) are concerned about the second quarter," UAE Oil Minister Obaid bin Saif al-Nasseri said Sunday at an oil conference. NYMEX March crude oil futures ended 75 cents lower at $32.76 per barrel. March gasoline was down 0.92 cent at 95.68 cents a gallon, while March heating oil was down 1.45 cents at $91.81 cents a gallon. COMEX platinum futures soared, taking the centerstage from gold, which was supported by the weak dollar. "It's still all go in terms of platinum and in gold it's been kind of a lazy day," said the head of a precious metals trading firm. "It certainly feels that this is hedge fund money that moved into platinum." Platinum, used in vehicle anti-pollution systems and jewelry, has risen almost 17 percent in 2003 amid support from a global supply deficit and fears that output from No. 2 producer Russia could be hit by a temporary work stoppage. There was also underpinning from President George W. Bush's State of the Union speech last week to spend $1.2 billion on funding hydrogen powered fuel cell vehicles. Platinum is a key component of fuel cells, which create electricity without pollution by combining hydrogen and oxygen, with water as the only byproduct. COMEX April platinum was up $24.80 at $683.70 an ounce. February gold was up $2.50 at $370.80 an ounce. CSCE coffee futures were lifted by supportive fundamentals, analysts said. "If you look at the International Coffee Organization export numbers for Colombia and other milds and robustas, they are below year ago," said Judith Ganes of J. Ganes Consulting. Traders who were friendly to the market also pointed to the recent ICO forecast that 2003 global supply could fall short of demand by 5 million 60-kg bags or more. In related news, growers and officials said Honduran coffee exports could fall to 2.4 million 46-kg bags during the 2002-03 season -- below the previous forecast of 3 million bags -- due to a cold January and damage from the coffee borer worm. CSCE March coffee ended 0.85 cent higher at 66.15 cents per pound. CBOT soybeans rebounded from early losses to end higher amid support from sold exports. The U.S. Agriculture Department said in its Monday report that 48.31 million bushels of soybeans had been inspected for export in the week of Jan. 30. The amount was a marketing year high, analysts said. Some 45 percent of the soy was headed for top buyer China. Traders reported talk that China was expected back in the soybean market after the weeklong Lunar New Year celebrations that end this week. CBOT March soybeans ended 4 cents higher at $5.68 per bushel, while March corn was off 1-1/2 cents at $2.36-3/4. March wheat was up 3 cents at $3.23-1/2.