A summary of trading in key commodities markets overseas:
ENERGY
Crude oil prices rallied on Wednesday, buoyed by a rebound in global stock markets and the aftermath of a tropical storm which was still disrupting oil production in the Gulf of Mexico.
New York’s main contract, West Texas Intermediate (WTI) light sweet crude for delivery in October, jumped $US3.32 to close at $US89.34 a barrel.
In London, Brent North Sea crude for October delivery advanced $US2.91 to settle at $US115.80 a barrel on the IntercontinentalExchange.
The oil rally mirrored strong gains on US and European stock markets, driven in part by a German court ruling that cleared the way for a bailout plan designed to address the eurozone’s sovereign debt crisis.
Meanwhile, about 37 per cent of oil production in the Gulf of Mexico – a key oil-producing region for the United States – remained shut-in on Wednesday due to Tropical Storm Lee, the US Department of the Interior said.
Traders were also eyeing weather conditions off the US and Mexican coasts for other storms that could become hurricanes.
“We see a reaction in part to the developing storms and we continue to see shut-ins in the Gulf of Mexico as a result of the hurricane that didn’t come,” said John Kilduff, at Again Capital.
“For the past weeks you had a correlation with the equities market, and that’s continuing also,” Kilduff added.
Hurricanes tend to jack up crude oil prices in the short term as offshore drilling rigs and refineries are forced to close and may be damaged in their wake, creating a supply disruption.
PRECIOUS METALS
Gold closed three per cent lower on Wednesday as investors sold the precious metal and bought stocks after a German court declined to block Germany’s participation in euro zone bailouts.
Both the spot price of gold and US gold futures fell below $US1,800 an ounce before settling off the day’s lows. The selloff came after the precious metal hit record highs above $US1,920 on Tuesday.
Stocks on Wall Street jumped two per cent, rallying with shares on other major exchanges, after Germany’s top court rejected lawsuits aimed at blocking Berlin’s involvement in emergency loan packages. Chancellor Angela Merkel called the ruling a validation of her euro zone policy.
At 4pm EDT (0600 AEST), spot gold was at around $US1,815 an ounce, down $US57 from the level seen in New York late on Tuesday. It hit a low of $US1,793.19 during Wednesday’s session.
In the futures market, US gold for delivery in December finished down $US55.70 at $US1,817.60 an ounce, moving between $US1,883.20 and $US1,793.80.
Wednesday’s swing of more than $US80 was the most volatile seen in gold in almost two weeks. In late August, bullion moved more than $US100 at times between session peaks and troughs.
Fears that lack of support from Germany and other economic powers would scuttle the bailout of debt-saddled European countries helped fuel much of the near 30 per cent rally in gold this year.
On Tuesday, the precious metal hit a record high of $US1,920.30 after the Swiss National Bank pegged its currency to the euro to prevent gains in the Swiss franc from damaging the country’s economy. Profit-taking began soon after gold peaked in that session.
Among other precious metals, silver was down about 1 per cent at below $US42 an ounce and spot platinum was down 1.8 per cent at under $US1,820 an ounce.
BASE METALS
Copper closed nearly two per cent higher on Wednesday to snap a four-day losing streak, lifted by higher global equity markets and festering labour disputes at some high-level mines.
Copper’s rise triggered gains across the broader base metals complex as confidence seeped back into global markets and allowed investors to focus on constructive fundamental backdrops.
London Metal Exchange (LME) benchmark copper was untraded in official rings, but bid at $US9,092 a tonne versus $US8,933 a tonne at the close on Tuesday.
In New York, the key December COMEX contract climbed 7.60 US cents or 1.9 per cent to settle at $US4.1320 per lb, near the upper end of the session’s range of $US4.0605 to $US4.1390.
Copper’s relationship with the S&P 500 Index is at its strongest in nine months.
Still, copper’s price rally lacked conviction as late trading volume in New York dropped to about 27,000 lots, or nearly half of the 30-day average, according to preliminary data from Thomson Reuters.
Stocks of copper in LME approved warehouses stand at 465,250 tonnes, little changed in recent months. Cancelled warrants – material earmarked for delivery – were at a mere 1.26 per cent of total stocks and show few signs of a pick up in demand.
Three-month aluminium ended at $US2,404 from $US2,380 a tonne on Tuesday, zinc closed up $US24 at $US2,240 a tonne, lead rose $US27 to $US2,415 and tin shot up by $US500 to end at 24,375 a tonne. Nickel rallied $US1,100 to finish at $US21,775 a tonne.