Commodities prices hit their highest level for the year on Monday, with European’s oil benchmark Brent trading above $73.50 a barrel, buoyed by positive economic data and a sharp weakening of the US dollar.
Other raw materials that hit a 2009 peak included heating oil, copper, aluminium, zinc, lead, nickel, rice, sugar, rubber and iron ore.
In addition, agricultural commodities such as corn, wheat and soyabeans rallied. White sugar in London soared to its highest price since July 1983.
The commodities rally came as manufacturing data from China to the US showed a marked improvement in July, suggesting that raw materials demand from industrial consumers will perk up.
The US Institute for Supply Management’s manufacturing index rose last month to 48.9 points, the highest since last August, and on the brink of the 50- point level that separates contraction from expansion.
“As the global economy moves towards growth as opposed to a recession, you are going to see further increases in commodity prices, especially next year,” said Nouriel Roubini, the influential New York University economist.
But he warned that China’s strong raw materials buying could abate in the second half of the year, opening the door for a short-term price correction.
In the energy market, Nymex September West Texas Intermediate oil was $2.13 higher by the close of trading at $71.58 a barrel, having previously hit an intraday high of $71.95 a barrel. ICE September Brent gained $1.85 to $73.55 a barrel, having earlier set a high for 2009 of $73.75 a barrel.
Tim Evans, energy analyst at Citi Futures Perspective in New York, said the rise seemed to be based on a combination of anticipation and vulnerability: “Anticipation that demand will recover quickly once the economic recession comes to the end, and vulnerability of those who are either short the market or have yet to build a sufficient long position as a defence against a further advance.”
Nymex September natural gas rallied more than 14 per cent to an intraday high of $4.162 per million British thermal unit. It later traded 8.6 per cent higher at $3.968 per mBtu.
On the London Metal Exchange, copper for delivery in three months put on 4.4 per cent to $6,011 a tonne, its highest level this year and the first time the red metal has traded above the $6,000-a-tonne mark since September.
Aluminium prices gained 3.9 per cent to $1,968 a tonne, their highest level in 2009. Zinc, lead, nickel and tin advanced by more than 5 per cent on the day.
Gayle Berry, a metals analyst at Barclays Capital in London, said copper and other metals prices were supported by Chinese buyers. “The metals are going from strength to strength, fuelled today by positive macro data from China.”
Among precious metals, spot gold and silver hit seven-week highs on the back of dollar weakness. In London, spot bullion rose to $962.1 an ounce, while silver rose to $14.47 an ounce.
Among agricultural and soft commodities, corn, soyabeans and wheat jumped by 4-6 per cent. Cotton prices rose 5 per cent on the day while coffee gained 2.9 per cent. White sugar rose to a 25-year high of $505.90 a tonne, up 3 per cent.
