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Surge In Oil Prices Triggers Precious-Metals Gains

November 22, 1988

Undated (AP) _ Oil futures prices surged Tuesday, helping trigger moderate gains in precious metals futures prices and lifting silver prices from 20-month lows.

On other markets, copper futures surged; orange juice futures plunged; sugar was up sharply; grains and soybeans were mostly higher; livestock and meat were mixed; and stock-index futures advanced.

Energy futures traded up their permitted daily limits at mid-session on the New York Mercantile Exchange on indications that OPEC oil ministers meeting in Vienna eventually would agree on new crude-oil production limits.

Some heating-oil contracts retained their 2-cents-a-gallon gains into the close but most other energy prices eased slightly in afternoon trading after Iran and Iraq renewed the verbal feuding that has held up progress on a plan to curb oil output, analysts said.

West Texas Intermediate crude oil settled 88 cents to 92 cents higher with the contract for delivery in January at $13.86 a barrel; heating oil was 1.70 cents to 2 cents higher with December at 45.44 cents a gallon; unleaded gasoline was 1.01 cents to 1.99 cents higher with December at 45.33 cents a gallon.

The inflation-sensitive precious-metals markets ″were trading off the back of the oil all day long,″ said Jerry Rothman of Elders Futures Inc. in New York.

Gold and silver futures posted sharp gains in morning trading on New York’s Commodity Exchange, then fell back as oil prices eased.

Nevertheless, Rothman said he expected gold to end its slide of the previous three sessions, rally on tightening supplies and pull silver higher as well.

Gold settled $1.60 to $1.80 higher with December at $418.10 a troy ounce; silver was 5 cents to 7.1 cents higher with December at $6.075 a troy ounce.

Copper futures surged on the Comex on a mix of bullish technical signals and renewed concerns about the near-term availability of physical supplies, said Bernard Savaiko, metals analyst with PaineWebber Inc. in New York.

Copper settled 1 cent to 9.10 cents higher with December at $1.428 a pound.

Prices of frozen concentrated orange juice futures plunged on the New York Cotton Exchange on a combination of weak chart signals and expectations for abundant orange harvests in both Florida and Brazil, analysts said.

But while improved growing conditions have boosted the outlook for the Florda orange crop, ″we are approaching the winter season and there’s always speculation that a cold front will come into the citrus groves of Orlando and Tampa,″ said Bert Ruiz, an analyst with Balfour Maclaine Corp. in New York.

Orange juice settled 2 cents to 2.5 cents lower with January at $1.6835 a pound.

Sugar futures prices leaped on New York’s Coffee, Sugar & Cocoa Exchange after the West German statistics firm F.O. Licht reduced its estimate for the 1988-89 European sugar beet crop by 750,000 metric tons.

Analysts also tied the surge in sugar prices to spillover buying from the oil markets on the neighboring New York Mercantile Exchange.

Sugar settled .10 cent to .49 cent higher with the active March contract at 10.65 cents a pound.

Grain and soybean futures finished mostly higher on the Chicago Board of Trade with the wheat market showing new vigor on speculation that the Agriculture Department was preparing to offer wheat to China.

But ″that rumor comes up on a two-week rotation,″ said Walter Spilka, a grain market analyst with Smith Barney, Harris Upham & Co. in New York.

Corn and soybean futures advanced modestly, mostly on follow-through buying from Monday’s late rally, Spilka said.

Wheat settled 1/2 cent to 6 3/4 cents higher with December at $4.15 a bushel; corn was 1 3/4 cents to 2 1/4 cents higher with December at $2.62 3/ 4 a bushel; oats were 1 3/4 cents to 3 cents higher with December at $2.09 a bushel; and soybeans were 2 1/4 cents lower to 5 cents higher with January at $7.50 3/4 a bushel.

Cattle futures ended modestly higher in light trading on the Chicago Mercantile Exchange in response to stronger cash markets, analysts said.

Pork futures finished mostly lower, pressured by Monday’s USDA monthly cold-storage report, which showed supplies of frozen pork products at a record Nov. 1 high.

Live cattle settled .10 cent to .40 cent higher with December at 72.77 cents a pound; feeder cattle were unchanged to .40 cent higher with January at 81.62 cents a pound; live hogs were 1.20 cents lower to .08 cent higher with December at 39.75 cents a pound; frozen pork bellies were .45 cent lower to .05 cent higher with February at 42.37 cents a pound.

Stock-index futures advanced moderately on the Chicago Mercantile Exchange, where the contract for December delivery of the Standard & Poor’s 500 settled 1.45 points higher at 268.35.

22-88 1806EST

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