Crude oil prices rose by more than $1 a barrel on Wednesday ahead of the latest US inventories data while gold regained the $1,000 level and base metals staged a broad advance as sentiment towards commodity markets found support from renewed dollar weakness.
Crude oil prices moved higher with Nymex November West Texas Intermediate up $1.14 at $67.85 a barrel while ICE November Brent gained $1.07 at $66.56 a barrel.
US inventory data due for release later in Wednesday’s session was expected to show that crude stocks rose 600,000 barrels last week as poor profit margins have weighed on demand from refineries. Activity by refineries was expected to fall 0.5 percentage points to 85.1 per cent, partly due to maintenance programmes.
Petrol stocks were seen rising 1m barrels last week while distillate stocks (including heating oil) were forecast to have increased 1m barrels.
Nymex October RBOB unleaded gasoline traded almost 4 cents higher at $1.6649 a gallon while Nymex October heating oil inched up just over ½ cent at $1.7070 a gallon.
Gold traded at $1,001 a troy ounce, moving in a range between a a low of $991.20 and a high of $1,001.60, after ending Tuesday’s session in New York at $991.20.
Sugar prices continued to trade strongly amid concerns about bad weather in Brazil, the world’s largest producer, where heavy rains have affected yields and output in the Centre South, the largest cane growing area.
Last week, Unica, Brazil’s Cane Industry Association, cut its forecast for Centre South sugar production in the year to March 2010 to 29.4m tonnes from its April projection of 31.2m tonnes. Traders have warned that output could fall further if the wet weather continues.
In New York, ICE October raw sugar eased 0.9 per cent to 23.44 cents a pound but the more active March raw sugar dipped 0.4 per cent at 24.82 cents a pound after reaching 25.15 on Tuesday.
The October contract was due to expire on Wednesday and its strength has caused some surprise among traders following market talk that up to 1m tonnes of sugar could be delivered against the expiry.
In the past, Cargill, the commodities trading house, has taken large deliveries of sugar from the expiring ICE contracts.
In London, Liffe December white sugar rose 0.4 per cent to $613.5 a tonne after reaching $617.7 on Tuesday, a record high.
The International Sugar Organisation forecast that the global market would see a supply deficit of 10.4m tonnes in the current season, mainly due to lower yields in Brazil and India because of adverse weather conditions.
Base metals rose but dealers said trading was likely to be dominated by position squaring at the end of the third quarter. Copper rose 3.1 per cent to $6,165 a tonne while aluminium added 1.8 per cent at $1,883 a tonne.
Dealers said trading this week had been lighter than normal due to China’s Golden Week holidays which start on Thursday.
