The price of oil rose for the first time in two days on Tuesday, aided by a weaker US dollar and encouraging economic data from China.
Nymex July West Texas Intermediate, the US crude oil benchmark, crept back towards last Friday’s seven-month high of $70.32 by gaining 79 cents to $68.88 a barrel. ICE July Brent, the European benchmark, rose 88 cents to $68.76.
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Market expectations that weekly crude stocks data will show a fall in US crude inventories also helped oil rise. Analysts have forecast data from the US Energy Information Administration, the oil statistical arm of the US goverment, to show that crude stocks fell by 400,000 barrels, according to a poll conducted by Reuters.
Oil prices have jumped since February at the same time as global equities and credit markets have rallied as investors started to position themselves for a recovery in the global economy. News that vehicle sales in China rose by 34 per cent last month fed into the recovery narrative, with some investors interpreting the data as a signal that global fuel demand would increase over the medium-term.
Recent dollar strength, prompted partly by better-than-expected US employment data last week, has dampened the appeal of dollar-denominated commodities for investors using non-US currency. But on Tuesday the US dollar traded lower.
Elsewhere in the commodities markets, agricultural commodities make broad-based gains. CBOT JULY soyabeans rose to a fresh 9-month high of $12.39 ¾ a bushel and CBOT July soymeal rose past yesterday’s 11-month high to hit $403.8. Both soybean and soymeal prices have been surging on concerns that US stocks could be exhausted before the new crop arrives in August due to production problems in Latin America.
Soya and soyameal are critical for the livestock industry as both are used to fatten hogs or chicken. The rise in feeding cost could push meat and poultry prices higher later this year, analysts said. Ready-to-cook chicken prices in the US rallied to 87.11 cents per pound last week, the highest in a decade, according to Bache Prudential.
CBOT corn for July delivery rose 4 ¼ cents, or 1 per cent to $4.39 ¼ a bushel, while CBOT wheat rose by 15 cents to $15.5 ½ a bushel.
Aluminium continued to rise in spite of news that the Chinese authorities had raised its tax rebates for exports of the metal – a sign that it want to lower the stockpiles of aluminium held by Shanghai traders.
Aluminium rose 0.5 per cent to $1623.75 per tonne, while copper gained 1.1 per cent to $5045 per tonne. Zinc, lead, nickel and tin also all ticked higher.
In precious metals gold ticked up by $1.43 or 0.15 per cent to $951.6 having fallen 0.7 per cent in the previous session.
