Commodity prices diverged this week, but oil topped US$105 per barrel after an upbeat non-farm payrolls report in the US, which is a top consumer of many raw materials including crude.
The US economy added a modest 175,000 jobs last month, official data showed Friday, scotching worries that job creation had slumped in the spring. Market expectations had been for a smaller gain of 159,000.
However, the news sent gold prices sliding as the US dollar strengthened on hopes that the US Federal Reserve would taper its stimulus sooner than anticipated.
The rising greenback makes US dollar-priced commodities more expensive for buyers using weaker currencies, which could hit demand and weigh on prices.
OIL: Prices spiked higher, with Brent oil rallying as high as US$105.01 per barrel on Friday, as the brightening US demand outlook offset a poor start to the week.
“Oil opened the week trading below the psychologically important US$100-per-barrel mark after suffering heavy losses over the weekend, but pushed above US$103 [by] midweek, supported by an improved outlook for demand,” Inenco Group analyst Lucy Sidebotham said.
The US Department of Energy on Wednesday said US crude reserves plunged 6.3 million barrels in the week ended on May 31. That was far more than market expectations for a 400,000-barrel drop.
A decline in stockpiles supports crude prices because it suggests a pick-up in oil demand. Gasoline demand traditionally rises during the US summer driving season, which is currently underway.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month jumped to US$104.68 a barrel from US$101.06 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month rallied to US$96.14 per barrel from US$92.67 a week earlier.
PRECIOUS METALS: Gold fell sharply on the back of the strong US dollar on Friday, while platinum rose on supply jitters in key producer South Africa.
“The stronger [US] dollar puts pressure on commodities and speculation that the better-than-expected employment picture may hasten the end of the Fed’s quantitative easing program, easing demand for the yellow metal as an inflation hedge,” CMC Markets analyst Matt Basi said.
By late Friday on the London Bullion Market, the price of gold sank to US$1,386 an ounce from US$1,394.50 a week earlier, as silver firmed to US$22.60 an ounce from US$22.57.
On the London Platinum and Palladium Market, platinum rose to US$1,505 an ounce from US$1,459, while palladium increased to US$754 an ounce from US$744.
COCOA: Cocoa futures rebounded on stubborn worries over forecasts of a large deficit.
The International Cocoa Organization last week hiked its forecast to a deficit of 60,000 tonnes for the season closing in September, up from a previous forecast of 45,000.
This week, trade publication Public Ledger predicted an even greater deficit of 74,000 tonnes and forecast a deficit of 178,000 tonnes for the next season.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery next month rose to ￡1,557 a tonne from ￡1,502 a week earlier.
On New York’s NYBOT-ICE exchange, cocoa for next month rallied to US$2,341 per tonne from US$2,210.
COFFEE: Prices dove to a three-year low point in New York on expectations of abundant supplies in top producer Brazil, but ended on a mixed note.