Commodity Roundup: Oil prices up $1; China stimulus lifts base metals (Commodity:CO1:COM)

Oil prices gained more than $1 Thursday, buoyed by U.S. crude stockpiles data which indicated strong U.S. demand, while the Chinese central bank’s cut in banks’ reserve ratio reinforced hopes of more stimulus measures and economic recovery. Brent crude futures were up +1.51% to $81.24 a barrel, while U.S. West Texas Intermediate crude was up +1.69% to $76.36.

“A significant drop in the U.S. oil inventories and expectations of China’s economic recovery and more stimulus measures supported oil prices,” Toshitaka Tazawa, an analyst at Fujitomi Securities told Reuters.

“Nevertheless, the gains were limited amid ongoing concerns of strong growth in supply outside of OPEC,” ANZ analysts wrote in a note. European gas prices also rebounded following signs shipments are being delayed amid tensions in the Red Sea. Qatar informed some European buyers of rescheduled shipments as it reroutes LNG tankers away from the trouble waters. The move was exacerbated by some opportunistic buying following the 10% fall this year, ANZ said.

Gold prices rose (XAUUSD:CUR) on the other hand gained as the U.S. dollar index eased, while markets looked ahead to the U.S. GDP report and the European Central Bank’s policy decision. Spot gold (XAUUSD:CUR) was up +0.33% to $2,019.28 an ounce by 6 am ET.

Bullion hit its lowest level in nearly a week on Wednesday after strong business activity data raised further doubts on how soon the Fed will switch to monetary easing. While gold is considered an inflation hedge, rising interest rates dull non-yielding bullion’s appeal. Nevertheless, investors have been looking to buy gold on weakness amid ongoing geopolitical uncertainty.

Copper prices also got a boost along with other base metals, from better than expected U.S. economic data, and after Beijing unveiled a plan to boost liquidity in its banking sector. This comes amid heightened concerns of supply disruptions across the metals sector. Copper, aluminium, nickel and zinc all have supply issues hanging over their markets, the ANZ report added.

Elsewhere among agriculture commodities, soybean, cocoa and wheat futures gained. The spread between Robusta and higher-quality Arabica coffee tightened to around US¢40/lb yesterday as Robusta prices soared to new highs – the premium reached a recent high of around US¢80/lb in December 2023, ING reported.

Robusta coffee’s active contract jumped to an all-time high of US$3,250/t yesterday at one point as supply disruptions from Vietnam and Brazil added to the supply tightness. “Moreover, the ongoing conflict around the Red Sea route makes it more challenging for Vietnamese coffee to reach the US and Europe,” the report said.