By Chris Flood
Published: January 2 2010 03:38 | Last updated: January 2 2010 03:38
Commodity markets ended 2009 on a high with US crude oil touching the $80 a barrel mark in the final trading session while white sugar extended its record-breaking run and copper, lead and zinc all enjoying price gains of more than 100 per cent over the year.
On new year’s eve, Nymex February West Texas Intermediate hit the $80 mark before settling 8 cents higher at $79.36 a barrel, a rise of 77.9 per cent in 2009.
ICE February Brent slipped 10 cents to $77.93 a barrel, up 70.9 per cent in 2009.
Oil prices were able to maintain upward momentum over the Christmas period amid ongoing tensions in Iran between opposition supporters and the government and by cold winter weather in the US which has boosted demand for heating oil.
Some traders think crude prices have moved into “overbought” territory amid lower trading volumes due to the Christmas holidays and that there could be a correction early in 2010 as market participants resume business and liquidity returns to normal.
Paul Horsnell of Barclays Capital expects 2010 to be a “bridging year” in a transition between demand-side weakness in 2009 and a return to supply-side tightness in 2011.
Geopolitical concerns are likely to play a role of “heightened importance” in energy markets next year, according to Barclays which predicted that crude oil prices would breach the $100 a barrel mark and average $85 a barrel over the whole of 2010.
Mr Horsnell said Chinese demand growth had been the main factor tightening the global oil market in 2009.
“The main reasons the bears got the price direction wrong over the past ten months in particular were insufficient attention to Chinese demand dynamics and insufficient attention to Opec dynamics,” said Mr Horsnell.
Sugar prices doubled in 2009 as bad weather affected output in Brazil and India, the world’s largest sugar producers. Global sugar stocks have shrunk to a record low and concerns that the market will face acute supply shortages early in 2010 helped prices maintain strong upward momentum in the final trading sessions of 2009.
White sugar prices extended their record breaking run above the $700 a tonne mark with Liffe March white sugar hitting an all-time high of $710.5 a tonne on new year’s eve, a gain of 123.4 per cent in 2009.
ICE March raw sugar up 1 per cent at 26.95 cents a pound, up 128.2 per cent in 2009.
Among the base metals, copper maintained its strong momentum amid concerns about potential supply disruptions as strikes threatened production in Chile.
Copper hit a 15-month high at $7,420 a tonne on new year’s eve before ending at $7,375, a gain of 140.2 per cent in 2009.
John Meyer, analyst at Fairfax, said he expected further gains for mining equities and base metals in 2010 helped by ongoing recovery in the global economy and that strong growth in China, India and other emerging economies could drive copper and some other commodity prices back towards record price levels over the next 12 to 18 months.
Gold ended 2009 just below the $1,100 mark at $1,096.35 a troy ounce, up 24.8 per cent over the year.
Gold hit a record $1,226.10 an ounce in early December and the bull market for bullion has now lasted for nine years.
