Recovery hopes propel commodity prices

LONDON – Commodity prices rallied last week, with oil shooting to six-month peaks above US$66, boosted by a weak dollar and increasing hopes of swifter-than-expected economic recovery, traders said.

‘Commodity markets at large are continuing to benefit from improving sentiment and risk appetite, supported by a flow of increasingly positive macroeconomic data,’ said analysts at Barclays Capital.
On Friday, traders digested official data showing that the recession-ravaged US economy – a major consumer of raw materials – shrank by 5,7 per cent in the first quarter.
However, that was less than the previous estimate of 6,1 per cent contraction for the January-March period, and followed a brutal 6,3 per cent drop in the fourth quarter of last year.
Crude prices soared Friday, lifted by the Opec oil cartel’s decision to hold output, weak US crude reserves and global economic recovery hopes.
Prices were also propelled higher as the US currency plunged to its lowest level against the euro so far this year, traders said.
New York’s light sweet crude rallied on Friday to US$66,47 dollars a barrel – last seen on November 5.
London Brent North Sea oil climbed to US65,70 – a level also last reached in early November.
In the foreign exchange market on Friday, the euro soared above 1,41 dollars to the highest point in 2009, as the US currency loses its safe-haven status amid increasing signs of global economic recovery, traders said.
The flagging greenback makes dollar-priced oil cheaper for holders of stronger currencies. That in turn tends to stimulate demand and push up oil prices.
This month, oil has surged by about 28 per cent in value on growing optimism about a pick-up in worldwide energy demand.
Opec decided Thursday to keep its output unchanged, with signs of economic recovery and higher crude prices persuading members to maintain their current production levels.
The Organisation of Petroleum Exporting Countries (Opec), which pumps 40 per cent of the world’s crude, held its production target at 24,84 million barrels a day after a meeting in Vienna.
Also on Thursday, the US government’s Department of Energy reported that American crude stockpiles tumbled by 5,4 million barrels last week, indicating strong demand in the world’s biggest energy consuming nation. Market expectations had been for a far lighter drop of 500,000 barrels.
‘News that Opec decided to keep production quotas unchanged… and a steep drop in US crude oil inventories meant that the petroleum complex strengthened,’ said analysts at the John Hall Associates consultancy.
On London’s InterContinental Exchange (ICE), Brent North Sea crude for July raced up to US$65,05 dollars a barrel from US$60,08 dollars a week earlier.
Gold struck a three-month high of 978.51 dollars an ounce as the US currency fell in value, while silver reached a near 10-month high of US$15,59 dollars.
‘Gold climbed further… as the dollar continued to weaken,’ said analysts at Barclays Capital in a note to clients.
By late Friday on the London Bullion Market, gold rallied to US975,50 dollars an ounce from US$959,75 a week earlier.
On the London Platinum and Palladium Market, platinum climbed to US$1 175 dollars an ounce at the late fixing on Friday from US$1 149.
Palladium gained to US$236 an ounce from US$234.
Base metals prices mostly rose from a week earlier.
‘Encouraging US macro data saw the metals strengthen,’ said analysts at Barclays Capital.
By Friday on the London Metal Exchange, copper for delivery in three months climbed to US$4 790 dollars a ton from US$4 582 dollars a week earlier. -Nampa-AFP