Crude Oil rose nearly 2 percent above $67 a barrel on Monday as U.S. equities jumped and news emerged that Iran was test-firing missiles. U.S. stocks climbed as more merger and acquisition activity encouraged investors and hinted at economic recovery, which could spur energy demand.
Support for oil also came from Iran test firing a type of missile on Monday that defense analysts said could hit Israel and U.S. bases in the Gulf region, state television reported. Tensions over Tehran's nuclear program have supported oil prices in recent years. The country is the second-largest oil producer in the Middle East. Even so, sluggish oil demand, reinforced by some lackluster economic data from the United States last week, continued to command investors' attention.
Oil prices posted their largest weekly decline in two to three months last week, pressured by government data showing U.S. crude oil inventories had risen, suggesting demand remains weak. U.S. durable goods orders dropped by the largest amount in seven months while a rise in new home sales was less than forecast, according to data from the U.S. Commerce Department on Friday.
Copper steadied after hitting a one-month low as investors weighed a turnaround in equity markets against concerns over rising inventories, falling Chinese imports and weak demand in western countries. Copper for three-month delivery on the London Metal Exchange ended at $6,009 a tonne from $5,990 at the close on Friday. It earlier touched a low of $5,855.25 - a level not seen since Aug. 19. Aluminium eased to a two-month low at $1,778, while nickel fell to a two-week low at $16,400. LME copper stocks added 3,650 tonnes to 344,350 tonnes - their highest since mid-May, while aluminium stocks slipped 5,525 tonnes but remained near a record 4.6 million tonnes. The dollar gave up most of its gains against a basket of currencies, boosting the appeal of dollar-priced metals.
Gold clawed higher on Monday after slipping below $990 per ounce mid session, with currency factors dominating direction. The market got boosted as a wave of economic optimism prompted investment inflows into assets classes across the board, bolstering the status of gold as a hedge against inflation. The inverse relationship between gold and dollar has recently strengthened. Gold is increasingly viewed as an alternative currency to the greenback.
