Crude oil jumped more than 4% to top $67 a barrel as economic data sparked fresh optimism that the
recession may be bottoming out. The number of U.S. workers staying on jobless rolls fell to the lowest in three months last week, according to the government data, while the four-week moving average for new claims dropped by 8,250, to 559,000 -- the lowest level since late January. Furthermore support also came from data showing Euro zone economic sentiment increased in July to its highest level in eight months, helping to lift European equities to their highest close in nearly nine months.
The central bank of China, the world's No. 2 oil consumer, said that it would keep a loose monetary policy to consolidate its recovery after fears Beijing might move to tighten money supply sent Chinese shares spiraling on Wednesday. Markets are rebounding with stocks higher, renewed optimism, and a weak dollar. Expectations a rebound in the global economy could bolster slumping fuel demand have helped push crude up from below $33 a barrel in December, with many investors looking to stock markets for early signs of a turnaround. The recession has battered global fuel consumption and sent crude tumbling from record highs near $150 a barrel struck in July 2008, prompting the Organization of the Petroleum Exporting Countries to agree a series of output cuts aimed at lifting prices.
Gold moved a little to the higher side, lifted along with other commodities by a drop in the dollar against the euro and rebounding oil prices. Trade held within an inside ranges between $928.40 and $935.60 an ounce. Reversal of dollar's fortune against euro helps drive gold prices up along with other commodities. Dollar's previous gains against the euro unravel as investors risk tolerance increases with better corporate earnings reports. The value of dollar denominated gold tends to increase in overseas markets when the U.S. currency declines. A planned sale of 400 tonnes of IMF gold would take place within a new central bank gold sales agreement now being negotiated.
Base metals accelerated to more than 3-4%, near 10-month highs, as China soothed global markets by
reaffirming loose monetary policy, but investors stayed jittery over a potentially slow global economic recovery. Lifting the mood in commodity and equity markets, China reiterated a commitment to expansionary policies. This comforted investors a day after markets were rattled by fears Beijing would clamp down on credit availability.
Some investors remained cautious about China's future moves. If there is going to be tightening in lending in China, and that has knock-on effects across the rest of the Chinese economy, then there will be adverse effects as far as all commodities are concerned. Investors are counting on fast-growing China to lead the way out of the global economic downturn. Furthermore investors are broadly confident that demand from China will keep supporting copper prices as investors await a recovery in OECD demand. Buying by China, the world's top copper consumer, has helped prices of the metal rocket about 80% so far this year.
