Commodity prices get Greek boost

1st July 2011, Comments 0 comments

World oil prices rebounded this week but metals were mixed as traders reacted to progress in the Greek debt crisis and disappointing global manufacturing data.

OIL: Prices rallied after a vote in the Greek parliament eased worries about a potential eurozone default and tempted more traders into riskier investments.

The market recovered from heavy losses suffered the previous week when the International Energy Agency (IEA) decided to tap strategic oil stocks in a bid to rein in high-flying energy prices.

"While the Greek parliament had been expected to pass the new austerity package, its approval has left investors more open to risk and oil prices have risen accordingly," said Commerzbank analyst Carsten Fritsch.

"The losses sustained when IEA reserves were released have thus been made up in full."

Greece's parliament on Thursday passed a tough austerity plan to avert a debt default that risked shaking the rest of Europe and the global financial system.

The passage of the measures paved the way for the release of more funds to Athens from a 110 billion-euro ($160-billion) European Union-International Monetary Fund rescue package agreed last year.

The measures include tax rises and spending cuts expected to increase short-term economic hardship, which have triggered a general strike and violent street protests in the country.

The market was also pushed higher by supportive inventories data in the United States, which is the world's leading oil consuming nation.

US crude inventories tumbled 4.4 million barrels last week, exceeding expectations for a smaller drop of 1.6 million barrels. Falling reserves indicate that US demand for energy remains healthy.

Prices trimmed their gains on Friday following news of a sharp slowdown for manufacturing in China, which is the world's biggest consumer of energy.

Growth in China's manufacturing activity almost stalled, with the official PMI falling for the third straight month to 50.9 in June from 52 in May, official data showed. Any score above 50 indicates growth.

By contrast, the US manufacturing sector picked up pace in June hinting at the end of a slumping second quarter, according to the closely-watched IMS survey.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in August jumped to $110.42 a barrel from $105.95 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for August gained to $94.29 a barrel from $90.92.

PRECIOUS METALS: Precious metals were mixed.

"Gold's safe haven role has lessened as confidence has grown that Greece would be able to avoid debt default," Credit Agricole analyst Robin Bahr said.

By late Friday on the London Bullion Market, gold fell to $1,483 an ounce from $1,514.75 the previous week.

Silver dipped to $33.85 an ounce from $34.73.

On the London Platinum and Palladium Market, platinum rose to $1,708 an ounce from $1,696.

Palladium increased to $750 an ounce from $739.

BASE METALS: Base metals rallied as the dollar weakened against the euro as Greece's fortunes improved.

"Metal prices ... have been boosted by the outcome in Athens, with market players' appetite for bigger risks increased," Commerzbank analysts wrote.

"Now that the worst of the uncertainty surrounding Greece has been dispelled, market players should start to concentrate on fundamental (supply and demand) data again.

"Copper still has the best fundamentals of all metals and we see the price remaining well supported."

By late Friday on the London Metal Exchange (LME), copper for delivery in three months increased to $9,423 a tonne from $9,110 the previous week.

Three-month aluminium rose to $2,514 a tonne from $2,507.

Three-month lead gained to $2,667 a tonne from $2,564.

Three-month tin advanced to $25,850 a tonne from $25,100.

Three-month zinc jumped to $2,375 a tonne from $2,251.

Three-month nickel climbed to $23,250 a tonne from $22,130.

COCOA: Cocoa prices jumped on supply issues in leading producer Ivory Coast.

"Ivorian cocoa farmers turned out some of the season's worst quality beans last week, much of it unsuitable for export, shippers at the top grower nation's ports said on Monday," The Public Ledger trade publication reported.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in September gained to £1,972 a tonne from £1,881 the previous week.

In New York on the NYBOT-ICE, cocoa for September increased to $3,118 a tonne from $2,961.

COFFEE: Coffee futures rallied after a two weeks of losses amid a drop in Brazilian production.

By Friday on NYBOT-ICE, Arabica for September was higher at 263.50 US cents a pound from 250.75 cents the previous week.

On LIFFE, Robusta for delivery in September advanced to $2,486 a tonne from $2,329.

SUGAR: Sugar prices powered ahead, reaching four-month highs of 769.50 pounds a tonne in London and 30.88 cents a pound in New York on Thursday before easing back.

"Sugar prices have gained on logistical delays at Thai ports and a weak start to Brazil's harvest," Barclays Capital analyst Sudakshina Unnikrishnan said.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October fell to 26.56 US cents a pound from 27.55 cents the previous week.

On LIFFE, the price of a tonne of white sugar for August increased to £749.50 from £733.40.

GRAINS AND SOYA: Grains and soya futures dropped.

By Friday on the Chicago Board of Trade, maize for delivery in September fell to $6.03 a bushel from $6.55 a week earlier.

November-dated soyabean meal -- used in animal feed -- slipped to $13.02 a bushel from $13.10.

Wheat for September declined to $6.15 from $6.61.

RUBBER: Malaysian rubber prices fell amid a lack of buying interest and ample supplies in the market.

The Malaysian Rubber Board's benchmark SMR20 slipped to 440.45 US cents a kilo from 441.10 cents a week earlier.

© 2011 AFP

0 Comments To This Article