By Eduard Gismatullin and Nidaa Bakhsh Dec. 8 (Bloomberg) -- Oil, copper and corn rose after President-elect Barack Obama pledged the biggest U.S. public works program in about 50 years to revive the economy. Commodities rebounded from last week’s losses on speculation spending on roads, bridges and repairing school buildings will boost raw material demand and engineer a recovery in the world’s largest economy. Obama said that his economic plan would create or preserve more than 2.5 million jobs. “Obama’s speech was positive in some respects -- that, yes, he’s got a handle on things,” said Robert Laughlin, senior broker at MF Global Ltd. in London. “But even he admitted things are going to get a lot worse before they get better.” Oil for January delivery rose for the first time in seven days, gaining as much as 8.2 percent to $44.16 a barrel on the New York Mercantile Exchange. The contract traded at $43.85 at 1:39 p.m. London time. Copper futures rose as much as 8.1 percent in London, while corn advanced 2.7 percent. Libya’s top oil official, Shokri Ghanem, said today OPEC should make a “substantial” output cut at its meeting next week. State-oil company Saudi Aramco announced today it will reduce crude oil supplies to Japan in January for a second month as the world’s largest oil exporter complies with the cut members agreed last month. “The oil markets are taking a little bit of an upward bump” from the news that Saudi Arabia was cutting supplies, said Mike Wittner, head of oil market research at Societe Generale SA in London. Getting Worse Oil fell the most since 1991 and metal prices slumped last week after economic data showed the recession is getting worse. The U.S. economy lost 533,000 jobs in November, the most since 1950 bar two months when the decline was inflated by a strike or natural disaster. Even with the prospect of a federal budget shortfall approaching $1 trillion, “we can’t worry, short term, about the deficit,” Obama said yesterday on NBC’s “Meet the Press” program. “We’ve got to make sure that the economic stimulus plan is large enough to get the economy moving.” The dollar dropped versus the euro, adding support to commodity prices. A weaker U.S. currency increases demand for commodities as a hedge and makes raw materials cheaper for foreign buyers. It dropped to 77.65 cents versus the euro. Copper for March delivery rose for the first time in eight days, reaching a high of $3,296 a ton on the London Metal Exchange. It traded at $3,285 a ton at 1:38 p.m. London time. Corn futures for December delivery rose to $3.0150 a bushel on the Chicago Board of Trade. Stocks Gain The U.S. stimulus plan prompted equities in Europe and Asia to rally and U.S. index futures to climb. The MSCI World Index added 2.7 percent to 871.50 at 12:01 p.m. in London as all 10 industry groups increased. Commodities’ rise “is more equity influence than anything else,” Kevin Tuohy, a trader at MF Global, said today by phone. “It’s still too early to say whether the rebound is a dead-cat bounce or that commodities have found a base.” Saudi Aramco, the world’s biggest state oil company, will reduce crude oil supplies to Japan in January for the second month. The Dhahran, Saudi Arabia-based producer will cut shipments to refiners including Nippon Oil Corp., Japan’s largest, by 7 to 10 percent from levels agreed under annual contracts, said two refinery officials who received notices from the company today. Brent crude oil for January settlement rose as much as $3.31, or 8.3 percent, to $43.05 a barrel on London’s ICE Futures Europe exchange. It traded at $42.91 at 1:38 a.m. local time. OPEC Cuts The Organization of Petroleum Exporting Countries pumps more than 40 percent of the world’s oil and cut daily output 1.5 million barrels in October as prices slumped and inventories rose. Chakib Khelil, OPEC president, said on Dec. 6 that the group may make a “severe” reduction in production to stem the 70 percent decline in prices from July’s record. “The oil price is now on the brink of an abyss,” said Tetsu Emori, Tokyo-based chief manager of the 1.4 billion yen ($15 million) Astmax Commodity Global Macro Fund. “Even if the cartel makes a substantial production cut, it won’t be enough to lift oil prices back up to the $60 mark if we see more drops in U.S. consumer spending.” To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Nidaa Bakhsh in London at nbakhsh@bloomberg.net.

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