* Zinc, rubber up around 60 pct; crude oil gains over 50 pct
* Commodities rally driven by China demand, output cuts
* Hopes of higher U.S. infrastructure spending fuels gains
* Gold up 9 percent, snaps three years of decline
(Adds latest prices for oil and annual percentage gain for U.S.
By Naveen Thukral and Mark Tay
SINGAPORE, Dec 30 Crude oil, rubber and metals
were set to end 2016 on Friday with strong gains, bouncing back
from several years of losses on the back of output cuts and
expectations of firmer demand.
Crude oil output cuts announced by OPEC,
stronger-than-expected demand in top commodities market China
and expectations of higher infrastructure spending in the United
States after the victory of Republican candidate Donald Trump
all boosted prices.
U.S. benchmark West Texas Intermediate (WTI) and
global benchmark Brent futures were steady in afternoon
trading on the New York Mercantile Exchange, heading for their
largest annual gains in seven years.
Brent has risen about 50 percent this year and WTI has
climbed around 43 percent, the sharpest gains since 2009, when
Brent and WTI rose 78 percent and 71 percent, respectively.
Looking forward, oil prices should gradually rise towards
$60 a barrel by end-2017, a Reuters survey found, but gains will
be capped by a stronger dollar, more U.S. oil exports and the
possibility that some OPEC members will not meet their agreed
"Accelerating non-OPEC (production) declines and OPEC's
decision to cut were key to the price rise in 2016," Energy
Aspects analyst Nevyn Nah said, while robust demand growth also
helped support prices.
"But the rebalancing process is still in its infancy and
speculators want to position for that," he added.
Benchmark zinc, steel rebar and rubber
have all rallied around 60 percent this year.
Benchmark TOCOM rubber futures logged their biggest gain
since 2009, mainly driven higher by the rally in crude oil and
In the base metals market, copper remained on course
for a gain of about 17 percent in its first annual rise since
Prices for steel rebar, used in construction, have surged
more than 60 percent this year on better-than-expected spending
on building and infrastructure and soaring costs for coking coal
due to government-enforced coal mine closures.
"I expect the steel price rally to continue in the first
half of 2017 when stock pilling will be at a final phase and
infrastructure construction programmes will start," said Zhou
Guangyan, steel analyst at Zhongcai Futures.
However, demand was likely to wane in the second half, with
inventory at a new peak and the market feeling the effects of
real estate regulations and potentially tighter monetary policy
in China, he added.
Zinc, which is used in steel production, climbed to a
nine-year peak last month with support from a series of mine
closures that have tightened ore supply, fuelling a speculative
For precious metals, gold was up more than nine percent this
year, snapping three years of losses as the market was lifted by
a demand surge during periods of economic and political
However, the outlook for gold in 2017 is bearish as
expectations of a rising U.S. dollar and higher interest rates,
combined with strong equity markets, will dampen demand for
Agricultural markets were some of the worst performers in
2016, with Chicago wheat poised to post an annual losses
of more than 13 percent due to all-time high global production.
Cocoa has tumbled almost 33 percent in its worst year
since 1999 as the prospect of a global surplus kept the market
on the defensive.
Palm oil and soybeans were exceptions. Palm
oil added almost a quarter to its value after dry weather curbed
output while soybeans gained 17 percent.
(Reporting by Naveen Thukral and Mark Tay, additional reporting
by Muyu Xu in BEIJING and Swati Verma BENGALURU and Jarrett
Renshaw in New York; Editing by Richard Pullin and Meredith