Commodity markets diverged this week, torn between strong global economic data and ongoing worries over the possible withdrawal of US Federal Reserve stimulus.
Encouraging economic data from Britain, China, the eurozone and the US sparked hopes of keen demand for many raw materials, providing limited support for some commodities.
Arabica coffee and sugar prices sank, as the Brazilian currency tumbled on fears that the Fed’s possible move could spark outflows of foreign cash.
OIL: Brent oil prices rose on demand hopes, bright data and geopolitical worries in the crude-rich Middle East region.
“Brent prices pushed higher at the end of the week following positive economic data released from China, the US, the eurozone and the UK,” analyst Lucy Sidebotham at British-based energy consultancy Inenco said.
“This showed the global economy to be recovering and could point towards higher oil demand,” she said.
However, traders were worried that the Egyptian unrest could hit crude shipments through the Suez Canal and Sumed Pipeline, which provide a link between Europe and oil producers in the Gulf. Further oil price support stemmed from supply outages in Libya.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in October advanced to US$111.06 a barrel compared with US$110.01 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September eased to US$106.20 a barrel, from US$107.59.
PRECIOUS METALS: Gold, silver and platinum hit multimonth highs on expectations that recent strong global data will translate into buoyant demand.
Gold rallied on Monday to US$1,384.55 per ounce — the highest level since June. Silver rallied to US$23.63, striking a peak last seen in the middle of May.
“The feel-good factor — the big economies around the world are all improving — has easily spilled over into the precious metal market,” Capital Spreads dealer Jonathan Sudaria said.
By late Friday on the London Bullion Market, the price of gold rallied to US$1,377.50 an ounce from US$1,369.25 a week earlier.
Silver climbed to US$23.06 an ounce from US$22.83.
On the London Platinum and Palladium Market, platinum increased to US$1,538 an ounce from US$1,524.
Palladium eased to US$752 an ounce from US$762.
BASE METALS: Base or industrial metals mostly fell, as some traders questioned the economic strength of key consumer China.
“We continue to think the backdrop for commodities in general, and industrial metals in particular, will be very challenging,” Capital Economics analyst Ross Strachan said, adding: “China’s rebound has been largely built on a rapid expansion of credit, so it is unlikely to be sustained.”
By Friday on the London Metal Exchange, copper for delivery in three months declined to US$7,335 a tonne from US$7,381 a week earlier.
Three-month aluminum slid to US$1,885 a tonne from US$1,927.
Three-month lead fell to US$2,214 a tonne from US$2,234, while three-month tin firmed to US$21,919 a tonne from US$21,800.
COFFEE: Coffee prices dived on the back of abundant supplies and slumping currencies in emerging market producer nations.
Arabica coffee sank to US$1.1635 per pound, which was the lowest level since July 2009.
“Besides the prospect of plentiful supply, the collapse of the currencies of key producer countries is weighing on prices,” Commerzbank analysts said.
“This is particularly true of the Brazilian real, given that Brazil is by far the most important producer of both Arabica coffee and sugar,” they said.
By Friday on NYBOT-ICE, Arabica for delivery in December sank to US$1.1690 a pound (0.45kg) from US$1.2470 a week earlier.
On LIFFE, Robusta for November dived to US$1,781 a tonne from US$1,920.
Prices headed lower, hit also by the weak real.
By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October decreased to US$0.1634 a pound from US$0.1723 a week earlier.