Oil price surges in New York, gold sparkles

London: New York oil price soared this week close to a record high on weak US energy stocks, while gold struck the highest level since May 2006.

But many commodities were hit after an unexpectedly weak jobs report in the United States on Friday sent American and European stock markets sliding on concerns about the world’s biggest economy, analysts said.

Gold hit its highest level since May 2006, lifted by factors including solid demand, geopolitical and economic jitters, and a weak US currency which makes dollar-denominated goods cheaper for buyers holding stronger currencies.

News emerged Friday that US employers shed 4,000 jobs in August -- the first drop in payrolls in four years.

That reignited concerns over the strength of the US economy, which is a key global market for raw materials, and sent base metals prices tumbling.

The depressed housing sector, turbulent financial markets and now a sharp weakening of the labour market is very bad news for the US consumer sector, noted CIBC economist Audrey Childe-Freeman.

OIL: New York crude hit $77.43 a barrel on Thursday, close to its record high of $78.77 struck on August 1.

Crude futures had spiked Thursday as news of weaker US energy reserves heightened supply concerns, before dipping Friday on profit-taking.

Oil prices eased off a little ... with investors pocketing profits after a strong rally this week Sucden analyst Andrey Kryuchenkov said. The market is looking firm and could test its record highs, he added.

The US Energy Information Administration revealed that American crude reserves tumbled by 3.9 million barrels in the week ending August 31.

That was far heavier than analysts’ consensus forecasts of a drop of 2.2 million barrels -- and stoked jitters about the strength of global supplies.

Prices were also supported by supply threats from geopolitical tensions and expectations that Opec will refrain from increasing output quotas at its meeting next Tuesday.Elsewhere, the market was tracking the threat to energy facilities from the ongoing Atlantic hurricane season. The season’s hurricanes so far have spared oil installations, although Mexican production has endured interruptions.

In the coming weeks, if Middle Eastern tensions increase and this coincides with fresh hurricane warnings in the Gulf, it is easy to see Brent crude smashing through the all-time highs, said Bank of Ireland analyst Paul Harris.

Brent’s record high stands at $78.40 , which was reached in 2006.

Traders are also looking to next week’s Opec meeting in Vienna. Opec members Iran and Qatar have indicated that they are against any increase in the cartel’s production quota.

In March, the Organization of the Petroleum Exporting Countries froze its official production quota at 25.8 million barrels of oil per day.

By Friday, New York’s main oil futures contract, light sweet crude for delivery in October, surged to $76.19 a barrel, from $74.14 a week earlier.

In London, Brent North Sea crude for October delivery soared to $74.47 a barrel on Friday, compared with $72.95 a week earlier.

PRECIOUS METALS: Precious metals leapt higher, led by star performer gold.

Gold prices touched $706.80 per ounce, which was last seen on May 17, 2006, as the metal was also lifted by rebounding demand and ongoing concern about world financial markets.

Geopolitical concerns in the Middle East have also attracted buyers to the precious metal, which is regarded as a safe-haven investment in times of uncertainty.

Syria said on Thursday that its air defences opened fire on Israeli warplanes which had violated its airspace at dawn that day.

Gold was also energised by higher crude prices, which increase the risk of inflation. The higher cost of goods and services raise the attractiveness of the precious metal as a defence against the erosion of the value of money.

On the London Bullion Market, gold soared to $701 an ounce at Friday’s late fixing, from $672