News Column

US jobs data lifts metals; supply strains drag oil

July 6, 2014

Commodity markets diverged last week as metals benefitted from better-than-expected US jobs data while oil futures were hit by easing supply strains.

Commodity markets diverged last week as metals benefitted from better-than-expected US jobs data while oil futures were hit by easing supply strains.


Crude futures slid on easing concerns over supply disruptions in Iraq and Libya, but losses were capped by evidence of healthy demand in the world's largest oil consumer, the United States, traders said. Singapore'sUnited Overseas Bank said in a client note that "supply fears begin to ease after Libya declared an end to an oil crisis that has slashed exports". Crude prices began sliding last week on Wednesday after Libya's interim Prime Minister Abdullah Al Thani declared that authorities had regained control of export terminals blockaded by rebels. Production in Libya, a member of the Opec, has been severely limited for a year after rebels last summer blockaded terminals as part of a campaign to restore autonomy in the country's eastern region. "Libya has seen promising progress [last] week in regards to recovering much of its halted oil export capacity," said Dorian Lucas, an analyst at energy consultancy Inenco. Concerns over a possible supply disruption due to Iraq's security crisis have also eased. By Friday on London'sIntercontinental Exchange, Brent North Sea crude for delivery in August slid to $110.87 a barrel from $113.18 one week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for August dropped to $103.90 a barrel from $105.55.

Precious metals

Gold hit three-month highs before the haven investment lost some of its gains because of the positive US jobs data. Palladium, meanwhile, hit a fresh 13-year high at $866.85 an ounce on solid demand for the metal, which is used to make catalytic converters for vehicles, and strike action in South Africa. By Friday on the London Bullion Market, the price of gold rose to $1,319.25 an ounce from $1,317.50 a week earlier. Silver increased to $21.12 an ounce from $21.04. On the London Platinum and Palladium Market, platinum climbed to $1,503 an ounce from $1,479. Palladium advanced to $866 an ounce from $839.

Base metals

Prices rose across the board, helped by positive data, while zinc hit a near three-year high at $2,270.25 a tonne thanks to supply strains affecting the industrial metal. Base metals were supported also by economic data from key importer China. By Friday on the London Metal Exchange, copper for delivery in three months jumped to $7,140 a tonne from $6,956 a week earlier. Three-month aluminium grew to $1,921 tonne from $1,886. Three-month lead climbed to $2,180 a tonne from $2,166. Three-month tin rallied to $22,790 a tonne from $22,315. Three-month nickel advanced to $19,500 a tonne from $18,825. Three-month zinc increased to $2,236 a tonne from $2,187.


Prices steadied amid signs of a healthy crop in Ivory Coast, the world's biggest producer of the key chocolate ingredient. Friday on Liffe, London's futures exchange, cocoa for delivery in September eased to 1,919 a tonne from 1,924 a week earlier. On the ICE Futures US exchange, cocoa for September dipped to $3,100 a tonne from $3,108 a week earlier.


Prices diverged, with Robusta-quality coffee higher on dry weather in Vietnam, while the price of Arabica beans fell owing to a large crop in top producer Brazil. On ICE Futures US, Arabica for delivery in September slipped to 171.80 a pound from 181.30 a week earlier. On Liffe, Robusta for September rose to $2,059 a tonne from $2,036 a week earlier.


Futures slid further on abundant supplies. By Friday on Liffe, the price of a tonne of white sugar for delivery in October stood at $469.40 compared with $483.10 for the August contract a week earlier. On ICE Futures US, the price of unrefined sugar for October dropped to 17.81 a pound from 18.55 a week earlier.


Prices in Kuala Lumpur fell as the Malaysian ringgit strengthened against the US dollar and due to concerns about demand in top rubber consumer China. The Malaysian Rubber Board's benchmark SMR20 dropped to 174.35 a kilo from 178.65 a week earlier.

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Source: Khaleej Times (United Arab Emirates)

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