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Crude, gold drop as extra Saudi oil eases fear
February 28, 2011 / 10:55 PM / in 7 years

Crude, gold drop as extra Saudi oil eases fear

NEW YORK (Reuters) - Commodity investors remained concerned about protests in the Middle East on Monday but Saudi Arabia’s reassurance that it would pump more oil unwound gains in crude and gold, while U.S. cocoa futures rocketed to a 32-year peak after gun battles erupted in Ivory Coast.

For February, most commodities showed monthly gains.

For Monday’s session, oil prices fell in volatile trading on expectations that increased production from Saudi Arabia would offset supply disruptions, after Libya’s turmoil sent prices to 2-1/2-year peaks last week.

Saudi Aramco CEO Khalid al-Falih told reporters extra supply needs caused by violent unrest in Libya had been made up, though he did not give exact figures saying it was “a moving picture.”

The Reuters Jeffries CRB index .CRB of 19 commodity prices rose slightly on Monday but posted a 3.25 percent gain for the month. Cotton and cocoa have paced the index's gains so far this year, and the light crude component is up 6.1 percent so far in 2011. (Graphic: )

Saudi Arabia’s oil production promises pushed gold prices off session highs that approached 2011’s peak levels, and the precious metal ended nearly even around $1,410 an ounce.

Still, gold notched its biggest monthly gain since August, as chaos in Libya and rising tensions across the Middle East spurred safe haven purchases of the precious metal.

Unrest across the Middle East and North Africa, which unseated leaders in Tunisia and Egypt before spreading across Libya, Bahrain, Yemen and other countries, fueled a 5.5 percent rise in gold prices in February.

Those protests sent U.S. crude oil futures up 5.18 percent in Feb, for their best monthly result since December.

On Monday, foreign powers accelerated efforts to oust Libyan leader Muammar Gaddafi as rebels fought government forces trying to take back strategic coastal cities on either side of the capital Tripoli.

“The Saudi’s are supposedly producing more, but on the supportive side there is still the uncertainty about how much the unrest in Africa and Middle East will spread and how long Libya’s oil will be shut off,” said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut

Brent crude futures for April fell 34 cents to settle at $111.80 a barrel, off its $114.50 intraday peak.

Cocoa’s sharp rise came as violence over the weekend in top grower Ivory Coast fueled fears a civil war would severely disrupt supplies from the beleaguered African nation.

Copper ended up for a third straight session, as healthier economic prospects boosted sentiment, outweighing the headwinds in the Middle East.

The base metal used in construction and electronics ended February higher for the eighth straight month.

Often viewed as a bellwether of global economic health because of its many industrial applications, copper settled almost one percent higher as geopolitical concerns eased and investors returned their focus on the domestic economy.

“This is more about continued data improvement. We have seen improvement in jobs, manufacturing, pretty much everything across the board with the exception of housing,” said Matthew Zeman, head of trading at LaSalle Futures Group in Chicago.

U.S. economic data indicated a robust U.S. manufacturing sector, with a gauge of factory activity in Midwest hitting a 22-1/2 year high this month.

U.S. corn futures rallied to end higher for a second session as worries about tight supplies overshadowed risk aversion that sent prices lower in early trade and has buffeted grains prices for more than a week.

Corn pulled wheat futures up. But soybeans closed lower and posted their first monthly decline in six months amid prospects for bumper South American harvests.

Corn posted its third straight monthly rise, its seventh of the last eight months, while wheat fell 6.9 percent for the February, its first monthly decline in three months.

Forces loyal to Ivory Coast’s incumbent Laurent Gbagbo were fighting on Saturday to push back rebels in the west of the country, the army chief said.

Reporting by Carole Vaporean; Editing by David Gregorio

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