Crude oil prices exploded higher this week as U.S. officials’ rhetoric toward Syria grew increasingly bellicose.
By mid-week, U.S. military intervention in Syria appeared imminent, which caused traders to buy up crude oil on the fear a greater conflict could ensue, threatening global oil supplies. The primary concern was Iran could launch counterattacks against Israel or attempt to close the Strait of Hormuz, a narrow waterway through which 20 percent of global oil travels. These concerns pushed crude oil to $112.24 per barrel mid-week.
Later in the week, commitment to immediate intervention appeared to be waning as American ally France urged the U.S. to wait for United Nations inspectors to investigate reports of chemical warfare, while the British Parliament voted against military action. These setbacks caused an about-face in the crude oil market, which tumbled as low as $106.75 on midday Friday.
As uncertainty abounds in the Middle East, many oil watchers expect continued volatility in prices, such as this week’s $6.68 (6.3 percent) shift from high to low.
Petroleum volatility spread to the gasoline market as well, where prices rose 4 cents per gallon during the week.
Soybean prices started the week with a bang, climbing the exchange-maximum 70 cents per bushel during the day on Monday, eventually climbing to an eleven-month high at $14.09.
Beans rallied on lack of rain, especially in the western half of the Midwest, where the plants need more moisture to fill their pods. Most farmers are finding the soybeans in the pods are much smaller than normal for this time of year due to this year’s late planting date, a factor that would decrease the overall size of this year’s harvest.
By Friday, a little more rain was forecast, helping to drive prices back down to $13.55.
Thinking ahead, many traders are still concerned that an early frost could devastate some corn and soybean plants, making long-term weather forecasts closely watched by those following the grain markets.
Gold Gyrates, Silver Swoons
Like the petroleum markets, precious metals took an elevator trip sharply higher midweek and then turned abruptly downward back to last week’s price range. Gold peaked at $1,432 per ounce while silver hit a four-month high of $25.12 before tumbling as the military strike against Syria was delayed.
By midday Friday, gold was trading for $1,397, down 2.5 percent from the high, while silver sank 6.5 percent to $23.48.