Commodities-Oil and soybeans rally, gold ends lower

Reuters, 06.06.03, 5:23 PM ET CHICAGO (Reuters) - Crude oil prices closed higher on Friday and pushed above $31 a barrel to 11-week highs amid expectations that world oil producers would come to some agreement in the next few days on restraining output. In other featured commodity trade, gold fell back as the dollar gained some ground on the euro in currency markets and softened gold demand out of Europe. Soybeans surged on rumors that imports by China may grow, and on strength in domestic processor bids. At the New York Mercantile Exchange, crude oil for July delivery closed 54 cents higher at $31.28 a barrel. The gains came as oil ministers from Saudi Arabia and Venezuela, two leaders of the Organization of Petroleum Exporting Countries, met the oil minister of non-OPEC exporter Mexico in Madrid ahead of OPEC's June 11 policy meeting. In London, the International Petroleum Exchange July Brent crude contract settled 36 cents higher at $27.80 a barrel. Venezuelan oil minister Rafael Ramirez, speaking in Madrid shortly before the meeting with Saudi oil minister Ali al-Naimi and non-OPEC Mexico's oil minister Ernesto Martens, said OPEC was prepared to make output cuts if necessary. Iraq, which can export more than two million barrels a day, is scheduled to restart oil exports soon. The U.S. advisor to the Iraqi oil ministry said on Friday he expected exports to reach about 1 million barrels per day by July. But with oil prices now near the top of OPEC's $22-$28 target band, some ministers have said they see no need for OPEC to cut output limits when it meets next Wednesday in Qatar. NYMEX oil prices have also risen 20 percent in the past month. After the NYMEX market closed on Friday, the three ministers issued a statement after their Madrid meeting saying that current world oil markets were balanced but the three countries would continue to coordinate on oil policy. The three were architects of drastic oil curbs that helped revive depressed prices in 1998 and 1999. Norway and Russia cooperated on production policy to varying degrees to halt a price slide in early 2002. NYMEX July gasoline closed 0.83 cent higher at 89.35 cents a gallon and July heating oil rose 0.95 cent at 78.18 cents.

DOWN DAY FOR GOLD At the COMEX in New York, gold prices closed lower after a smaller-than-expected drop in U.S. payrolls shored up the dollar. COMEX August gold fell $5 at $364.50 an ounce. Gold continued to be tied to the soaring euro, which has boosted the buying power of European investors for dollar denominated gold. Gold hit 15-week highs last week as the euro made a record high at $1.1932, with speculators hoping to ride gold's rally back to February's six-year highs near $390. "Right now I think everyone is getting chopped up with the mixed signals and volatility," said Robert Gottlieb, head of bullion dealing at HSBC. "Today's number obviously took people by surprise." The euro's rally was thwarted by U.S. Labor Department news that May nonfarm payrolls fell 17,000, less than the 39,000 drop expected, amid concerns about a "jobless recovery." Spot gold bullion fell to $363.50/4.00 from the prior close at $368.50/9.00. The afternoon fix in London was $363.00. The dollar's surge lowered the euro to $1.1702/05 at midafternoon from $1.1841/47 late Thursday. The Dow Jones industrial average also edged higher, diluting gold demand. At the Chicago Board of Trade, a strong rally in soybeans was tied to talk that China, the number one soy importer, may have to import more than projected in the coming year if dryness in its northern Plains turns into drought. Rumors circulated that China had bought 100,000 metric tons or more of South American soybean oil late this week. Meanwhile, processors in the United States were bidding higher to acquire beans to keep plants operating before the autumn harvest. Due to last year's drought and huge exports to China, U.S. soybean stocks are forecast to fall to seven-year lows by September -- less than two weeks' supply. Soybeans for July delivery closed 12-3/4 cents a bushel higher at $6.31-1/2, with July soybean meal up $5.90 per short ton at $193.80 and July soybean oil up 0.24 cent a pound at 22.32 cents.July corn was buoyed by those gains and closed up 3 cents at $2.38-3/4. July wheat ended unchanged at $3.20-1/2.