Commodities up on hopes for euro debt solution, US data

7th October 2011, Comments 0 comments

Commodity prices mainly rose this week as traders tracked central bank efforts to steady the global economy, growing speculation over the recapitalisation of European banks and upbeat US data.

The European Central Bank unveiled plans on Thursday to boost liquidity in a move that eased eurozone debt crisis fears, while the Bank of England announced it would pump another £75 billion into the struggling British economy.

"The decisions taken by central banks provided a major boost," said Commerzbank analyst Carsten Fritsch.

"The Bank of England announced that it would be resuming its bond purchases.

"And the European Central Bank, while it did not cut interest rates, as had been expected by some market participants, announced a number of measures to boost liquidity and thus stabilise the banking system."

However, late on Friday, investor sentiment was jarred by news that Fitch ratings agency downgraded sovereign credit ratings for both Italy and Spain.

Markets were lifted earlier Friday by a labour market report showing the United States economy -- a leading consumer of many raw materials -- created more jobs than expected in September.

OIL: World oil prices rallied after the ECB announced measures to help cash-strapped banks in the eurozone under pressure from the eurozone debt crisis.

The market found further support on Friday when figures showed the US economy created a net 103,000 jobs in September.

While that was much stronger than the 60,000 jobs analysts expected, the number of new payrolls was not enough to lower the unemployment rate, which has been stuck at 9.1 percent for three months.

"Oil prices are on track to show some significant gains," said PVM analyst David Hufton.

However, sentiment remains extremely nervous amid uncertainty surrounding the outlook for global energy demand, analysts cautioned.

"The economic outlook in Europe and US remains uncertain," noted Victor Shum at energy consultancy Purvin and Gertz.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in November was higher at $105.86 a barrel from $103.12 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for November, jumped to $82.82 from $80.65.

PRECIOUS METALS: Prices mostly rose, mirroring stock markets, amid talk of an overhaul of Europe's troubled banking sector.

"Gold ... is proving highly volatile at present and is moving largely in line with the equity markets," said Commerzbank analysts.

They said the metal rose "as fears of a recession eased and hopes emerged for recapitalisation of the European banking sector."

By late Friday on the London Bullion Market, gold rose to $1,652 an ounce from $1,620 the previous week.

Silver advanced to $31.98 an ounce from $30.45.

On the London Platinum and Palladium Market, platinum increased to $1,529 an ounce from $1,511.

Palladium declined to $609 an ounce from $614.

BASE METALS: Industrial metals aimed higher as traders seized on the upbeat US payrolls figures and central bank news leads.

"Base metals gained over the course of the week as a gradual (greater appetite for risk) filtered through in the wake of ECB and BoE action," said Credit Agricole CIB analyst Robin Bhar.

Prices were also lifted by "more positive news flow on the eurozone sovereign debt crisis and the fact that policymakers are now talking about re-capitalising European banks."

By late Friday on the LME, copper for delivery in three months rebounded to $7,348 a tonne from $7,070 the previous week.

Three-month aluminium firmed to $2,230 a tonne from $2,223.

Three-month lead dropped to $1,963 a tonne from $2,000.

Three-month tin increased to $22,925 a tonne from $20,500.

Three-month zinc fell to $1,905 a tonne from $1,968.

Three-month nickel rose to $19,030 a tonne from $18,150.

COCOA: Prices got support from rising global stock markets.

"Cocoa contracts ... were higher as stronger equity markets and a lower US dollar helped to push the market upward," said industry publication the Public Ledger.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in December rose to £1,735 a tonne from £1,724 the previous week.

In New York on the NYBOT-ICE, cocoa for December firmed to $2,676 a tonne from $2,658.

COFFEE: Coffee prices hit fresh nine-month lows in both London and New York at the start of the week, before rebounding into positive territory.

By Friday on NYBOT-ICE, Arabica for delivery in December rose to 234.40 US cents a pound from 230 US cents the previous week.

On LIFFE, Robusta for November advanced to $2,025 a tonne from $1,979 a tonne.

SUGAR: Prices lost ground on anticipation of a major surplus in the 2011-12 season.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in March stood at 24.08 US cents a pound compared with 25.19 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for December fell to £641.70 from £657 the previous week.

RUBBER: Prices rose slightly, supported by higher oil prices and the prospect of supply cuts by top rubber producer Thailand. Crude oil is used in the manufacture of synthetic rubber.

The Malaysian Rubber Board's benchmark SMR20 increased to 420.30 US cents a kilo from 412.75 the previous week.


© 2011 AFP

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