Oil prices rally; sugar trades at 28-year high

OIL: Oil prices jumped as a larger-than-expected drop in U.S. energy stockpiles led to hopes of rising demand, traders said.

Data released by the U.S. Department of Energy on Wednesday showed stockpiles of crude dropping by 4.9 million barrels to 327.5 million in the week ending December 18, far above analyst expectations of a 1.1 million-barrel drawback. Distillate inventories also slid 3.1 million barrels last week, against analyst forecasts of a 1.6 million barrel fall. Data for distillates, which include heating oil, is in focus as winter starts to bite in the United States and Europe.

Analysts cautioned however that despite the fall in stockpiles, inventory levels were still high.

“Crude oil stocks are still lingering near the upper end of the five-year range, thus creating doubt in our mind as to the underlying strength of the recent price rally,” MF Global analyst Tom Pawlicki said.

Oil prices have meanwhile risen for much of the week as traders bet on improving demand after OPEC decided against changing the cartel's official crude output levels.

The Organization of Petroleum Exporting Countries, as expected, held its crude output quotas unchanged at its meeting in Angola Tuesday, warning of lingering weakness in the world economy.

Tuesday's meeting capped a year of recovery for oil prices, which have more than doubled since the cartel set strict quota cuts in the depths of the economic crisis a year ago.

In January the cartel enforced total OPEC cuts of 4.2 million barrels a day, which helped prices recover from around 32 dollars one year ago. Meanwhile last week, OPEC slightly upgraded its forecast for world oil demand growth next year but said usage in advanced economies would contract again.

Several of the cartel's members have said the current price of oil is comfortable for them.

By Thursday on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in February jumped to 77.02 dollars from 74.14 dollars the previous Friday.

On London's InterContinental Exchange (ICE), Brent North Sea crude for February delivery advanced to 75.63 dollars compared with 74.50 dollars.

PRECIOUS METALS: Gold and silver prices steadied, while platinum and palladium rose.

Gold managed to stay above 1,100 dollars in the wake of recent profit-taking following its run-up to a record high of 1,226.56 dollars an ounce at the start of December.

“The dollar continued to determine price direction for the precious complex,” said James Moore, an analyst at the bulliondesk.com.

The U.S. currency has weakened recently, lending support to gold, which is seen as a safe-haven investment.

By Thursday on the London Bullion Market, gold stood at 1,104.50 dollars an ounce, unchanged from the previous Friday.

Silver edged up to 17.32 dollars an ounce from 17.31 dollars.

On the London Platinum and Palladium Market, platinum increased to 1,456 dollars an ounce Thursday from 1,417 dollars the previous Friday.

Palladium rose to 377 dollars an ounce from 365 dollars.

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