COMMODITIES-Rally on US budget hopes, Mideast worries lift oil

Tue Nov 20, 2012 2:49am IST

Related Topics


Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

* U.S. budget compromise hopes, weak dlr lifts commodities

* Gold adds 1 percent, copper up 2 percent

* Oil gains nearly 3 pct on Israeli-Palestinian tension

* Grains, softs also rise; sugar up 4 percent

By Karl Plume

CHICAGO, Nov 19 (Reuters) - Oil rallied nearly 3 percent on Monday to the highest level since mid-October on worries about escalating violence in the Middle East and on signs of progress in talks to avert a looming U.S. budget crisis.

Gold climbed 1 percent, clawing back all of last week's decline, and copper rose to a two-week high in a broader commodities market rally that also bolstered grains and softs.

The Thomson Reuters-Jefferies CRB index, a global commodities benchmark, notched its steepest gain in two weeks and jumped to a 3-1/2 week peak as the dollar slipped 0.5 percent.

Top Democratic and Republican lawmakers appeared confident they could reach a deal to avert tax hikes and spending cuts which could send the U.S. economy back into recession, boosting investor appetite for risk.

"There is a little confidence that the chatter that came out last week between the president and congressional leaders might be working toward an agreement," said Gene McGillian, analyst, Tradition Energy in Stamford, Connecticut.

Oil traders also focused on the growing Israeli-Palestinian conflict.

Israel bombed targets in the Gaza Strip for a sixth day on Monday and said it was prepared to step up its offensive by sending in troops, although it preferred a diplomatic solution.

Previous Middle East wars have led to oil embargoes and temporary disruptions to energy supplies, but analysts said it was unlikely the conflict would widen in the region, which supplies a third of the world's crude.

"There's no oil being lost, obviously. But it's just the follow-on effect. No one likes confrontation anywhere near the Gulf region," said Rob Montefusco, oil broker at Sucden Financial in London.

Front-month Brent crude for January delivery rose $2.75, or 2.52 percent, to settle at $111.70 a barrel. U.S. January crude rose $2.36, or 2.7 percent, to $89.28.

Gold advanced as hopes for a U.S. budget compromise and a tentative euro zone plan to fund debt-choked Greece for another two years tempered fears of a renewed global recession, fueling buying of bullion and other investments.

Spot gold jumped 1 percent to $1,731.05 an ounce by 2:37 p.m. CST (2037 GMT). U.S. gold gained 1.15 percent to $1,734.00 an ounce.

Three-month copper on the London Metal Exchange ended at $7,803 a tonne, up 2.6 percent from Friday's close of $7,605.

Other metals also rallied, with benchmark nickel touching its highest since the beginning of November and tin hitting their highest levels in nearly two weeks.

Slumping U.S. grain futures rose along with the broader commodities market in technical bounce from oversold conditions.

January soybeans at the Chicago Board of Trade gained 0.9 percent to $13.95-3/4 a bushel, December corn added 1.6 percent to $7.38-1/2 and December wheat rose 0.5 percent to $8.42.

The grain markets were due for a rebound after soybeans set a five-month low on Friday, erasing gains from the summer's devastating U.S. drought, and wheat fell to a four-month low.

In soft commodities, raw sugar futures surged more than 4 percent in the strongest single-day gain in nearly two months in a technical buying and speculative short-covering rally that offset fears about a growing global surplus.

March sugar in ICE settled 4.1 percent higher at 19.94 cents per pound. March white sugar on Liffe rose 3.18 percent to $525.50 per tonne.

Arabica coffee and cocoa futures were also firm, supported by the weaker dollar and gains in equities and commodities markets.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared


Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

DLF Shares

DLF Shares

DLF slides 3 percent, underperforms rivals.  Full Article 

Global Economy

Global Economy

Chinese factories stalling as euro zone business picks up  Full Article 

Rupee Falls

Rupee Falls

Rupee falls for third day; foreign fund inflows key.  Full Article 

Record High

Record High

BSE Sensex hits record high for third straight day.  Full Article 

M&M Upgraded

M&M Upgraded

Credit Suisse upgrades Mahindra & Mahindra to 'outperform'  Full Article 



Manchester United’s crisis has silver lining  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage