BP oil drilling rig in the Gulf of Mexico

The price of crude oil in New York closed at a record high of more than $100 a barrel on Tuesday, fuelled concerns about supply problems and fears that the OPEC oil cartel will not increase production quotas at its next meeting. Other commodities also surged threatening a rise in global inflation.

Current OPEC president Chakib Kheli signalled on Monday that production would be either cut or unchanged.

On the on the New York Mercantile Exchange (Nymex) West Texas Intermediate for March delivery, hit a new record of $100.10 a barrel, overtaking the previous peak of $100.09 set in January.

The contract closed at $100.01, up $4.51, before retreating to $99.21 for April delivery, on Wednesday morning - check recent Nymex price.

Analysts said that traders covering their positions before the expiry of the March contract at the close on Tuesday, was a factor in triggering the rise.

An explosion on Monday at Alon’s 67,000 barrels-a-day refinery in Big Spring, Texas, was also a factor. The refinery is expected to remain closed for two months. Besides, Lukoil has halted crude supplies from Russia to German refineries because of a pricing dispute, while some shipments in Nigeria have been disrupted by a pipeline leak.

The International Energy Agency (IEA) recently said that oil stocks measured as a proportion of daily consumption in the 30 mainly developed, Organisation for Economic Co-operation and Development (OECD) countries, have fallen to a three-year low, at 51 days, despite worries  that the US economy might sink into recession and reduce demand for crude.

Last week, the IEA, the energy adviser to developed world consuming countries, cut its forecast for global oil consumption this year, because of the slowing US economy.

However, demand is robust in emerging markets while supply constraints mean that any disruption creates a big ripple in the market.

Sadad I. Al-Husseini, an oil consultant and former Executive Vice President at Saudi Aramco, the kingdom's national oil company, warned last October that the major oil-producing nations are inflating their oil reserves by as much as 300 billion barrels. These amount to hypothetical reserves that are "not delineated, not accessible and not available for production."

Much of the production in the Middle East is from mature reservoirs, and the giant fields of the Arabian Gulf region, he said, are 41% depleted.

Global oil and gas capacity is constrained by mature reservoirs and is facing a "15-year production plateau," Al-Husseini said. He forecast that supply shortages will continue to add $12 to the price of oil for every million barrels a day in additional demand. Global demand, now at some 85 million barrels a day, was on average 10 million barrels a day lower in 1999.

Other commodities are also surging with coffee, cocoa and tea markets close to boiling point. As with oil, besides demand/supply issues, investment speculation is a factor in all product markets.

Arabica coffee – the highest quality bean – rose last week to a 10-year of $1.6015 per pound, up 36% in the past year.

Last week, cocoa prices in New York hit a 24-year high of $2,585 per tonne, up 45% in the last year.

Political instability and forthcoming elections in Ivory Coast, the world’s largest cocoa producer is a factor as well as drought.

Japanese tea plantation

In 2008, world tea prices are expected to maintain their upward trend as a result of a tight supply on the world market exacerbated by a projected 10% decrease in Kenyan production due to civil unrest, according to a UN Food and Agriculture Organization (FAO) report on current and future trends in the tea market prepared for the Global Dubai Tea Forum 2008 (February 19-20).

This follows a review of the world tea market for 2006 which indicated an improvement in the fundamental oversupply situation that had persisted for many years. The FAO Composite Price, as a world indicator price for tea, increased by 11.6% to reach $1.83 per kg in 2006. The market fundamentals for 2008 suggest that this trend is likely to continue as the FAO Index has increased a further 6.5% to $1.95 per kg in 2007.

World tea production grew by more than 3% to reach an estimated 3.6 million tonnes in 2006, according to latest available figures cited by the FAO. The expansion was due to another record crop in China with 1.05 million tonnes – an increase of 9.5% over the record established in 2005 – and a record 28% increase in output in Viet Nam which pulled its production up to 133, 000 tonnes.

Wheat may average $15 a bushel next year, about 57% more than the average so far this year, because of increased demand for biofuels and food and little change in the acreage used to grow the grain, UniCredit SpA said on Monday.

``Rising global population, the production of biofuels and more protein-rich nutrition in emerging markets are triggering a steady increase in demand'' at about 1.6% a year, Jochen Hitzfeld, a commodities analyst in Munich at Italy's largest bank by assets, said in a report. The area given over to wheat has been ``stagnating'' for 30 years, he said.

Wheat rose to a record $11.53 on Feb. 11th. On Tuesday, on the Chicago Board of Trade, wheat for May delivery added 5.5 cents to $10.475 a bushel; March corn gained 5.25 cents to $5.20 a bushel; March oats rose 10 cents to $3.68 a bushel; May soybeans jumped 26.5 cents to $14.1775 a bushel.

Wheat closed at $10.47 a bushel in Chicago, while corn, soybeans and other agricultural commodities rose.

Reports that China will be seeking extra supplies of  canola (rapeseed), after the recent snow havoc, drove prices for Malaysian and Indonesian palm oil and European rapeseed to record levels overnight. China's rising food needs have seen the prices of all vegetable oils rise, especially canola and palm oil which are also being used by biodiesel producers in Asia and Europe.

The US is the biggest exporter of wheat and he Department of Agriculture said earlier this month that wheat stocks had fallen to a 60-year low.

Finfacts Report: Wheat, rice and soyabean prices hit new records in February 2008 as Developing Countries grapple with soaring food prices; US wheat stocks at 60-year low

In the US, traditionally the "food bowl" of the world, bakers' associations and big wheat consumers have urged the Bush Administration to limit the export of high quality grain after prices for bread making wheat, which hit a record $19.88 a bushel last Friday.