Commodity prices, which fell during most of the past week, rallied strongly Friday on speculation of more China stimulus measures to boost demand in the Asian powerhouse nation.
Commodities had earlier fallen mainly on uncertainty over prospects for more US stimulus and owing to a strong dollar dampening demand for raw materials priced in the American currency.
Prices rebounded on official data showing China grew 7.6 percent in the second quarter year-on-year – the slowest rate for the world’s second-largest economy since the depths of the global financial crisis in early 2009.
“The China stimulus story looks all the more apparent, boosting commodities,” said Jack Pollard, an analyst at Sucden Financial brokers in London.
Nevertheless, traders remained on edge over the eurozone debt crisis after Moody’s cut Italy’s rating late Thursday to within two notches of junk status, and as Spanish 10-year bond yields stayed close to the danger level of 7.0 percent.
OIL: Prices see-sawed this week as traders tracked supply-side worries and concerns over the global demand outlook, but finished with a strong push higher.
Brent spiked above $100 on Monday as Norway’s oil industry appeared headed for a labour lockout in the world’s eighth biggest crude producer.
The market slumped on Tuesday by more than $2.0 after Norway halted the oil workers’ strike that threatened production, while news of weak Chinese crude imports also stoked demand concerns.
Crude futures then rebounded Wednesday on bargain hunting and as traders digested an upbeat US energy inventories report.
The US Energy Information Administration (EIA) said American crude oil inventories slumped by almost 4.7 million barrels in the week ending July 6.
That was much larger than market expectations of a 1.1 million-barrel decline and suggested rising demand in the world’s largest oil-consuming economy.
Oil extended gains on Thursday, helped by fresh US sanctions on key crude producer Iran and a dip in claims for US unemployment benefits.
The United States unleashed a fresh wave of sanctions against Iran, ratcheting up pressure to convince Tehran to take seriously concerns about its suspected nuclear weapons programme.
The actions impose additional sanctions on Iran’s nuclear and ballistic missile proliferation networks and identify Iranian “front” companies and banks to assist in compliance, the Treasury Department said.
Crude prices continued to soar on Friday as traders bet on more Chinese stimulus measures to bolster the nation’s flagging economy.
“Oil has been reluctant to push above $100 for much of this week as bearish demand amid slowing world economies has outweighed concerns over supply disruptions,” said analyst Tom Pering at energy consultancy Inenco.
“This was particularly true after the Norwegian strike was ended by the government.
“However, Chinese (data) reassured investors. With the eurozone debt crisis still rumbling on and the short-term bulls (who are betting on higher prices) currently in control of the market, I expect (Brent) oil to remain within a tight range of $99-103 per barrel over the coming week.”
Analysts remained divided about the long-term prospects for the oil market after major industry groups differed in their demand growth forecasts for the coming year.
The International Energy Agency on Thursday forecast that oil demand growth would grow by one million barrels a day next year, in the grouping’s latest monthly market report.
That was a more optimistic stance than the Organisation of Petroleum Exporting Countries, which said earlier this week that it expected a modest growth of 0.8 million barrels per day in 2013.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in August jumped to $102.23 a barrel from $98.37 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for August rallied to $86.82 a barrel from $84.68.
PRECIOUS METALS: Gold prices rebounded during a volatile week’s trading for the precious metal, owing to much of the same reasons that influenced the direction of oil on markets.
They fell sharply on Thursday before winning a late lift ahead of the weekend break.
By late Friday on the London Bullion Market, gold jumped to $1,595.50 an ounce from $1,587 a week earlier.
Silver gained to $27.48 an ounce from $27.32.
On the London Platinum and Palladium Market, platinum decreased to $1,424 an ounce from $1,450.
Palladium grew to $581 an ounce from $577 an ounce.
BASE METALS: Base metals mostly rose thanks to a late rally. Prices had earlier slid, with nickel hitting a 2.5 year low at $15,770 a tonne Thursday.
“It now appears that we are entering a stage where weak economic news is being seen as potentially short term bullish for prices as the market expects more stimulus,” said William Adams, analyst at information group Fast Market.
By late Friday on the London Metal Exchange, copper for delivery in three months grew to $7,658 a tonne from $7,573 a week earlier.
Three-month aluminium rose to $1,916 a tonne from $1,910.
Three-month lead advanced to $1,878 a tonne from $1,841.
Three-month tin climbed to $18,800 a tonne from $18,750.
Three-month nickel decreased to $16,240 a tonne from $16,513.
Three-month zinc increased to $1,872 a tonne from $1,840.
COFFEE: Coffee prices diverged as markets reacted to heavy rain in Brazil, which supported Arabica, and abundant supplies in Vietnam that weighed on Robusta.
By Friday on NYBOT-ICE, Arabica for delivery in September grew to 184.60 US cents a pound from 177.35 cents a week earlier.
On LIFFE, Robusta for delivery in September fell to $2,039 a tonne from $2,086.
COCOA: Cocoa futures retreated on weaker European demand that helped to offset tight supply worries in leading producer Ivory Coast.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in September eased to GBP 1,565 a tonne from GBP 1,566 a week earlier.
In New York on the NYBOT-ICE, cocoa for September gained to $2,274 a tonne compared with $2,269.
SUGAR: Sugar prices were mixed.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in August dropped to $613.60 from $637.40 a week earlier.
On NYBOT-ICE, the price of unrefined sugar for October stood at 22.70 US cents a pound compared with 22.09 cents the previous week.
RUBBER: Prices slipped as traders stayed on the sidelines amid persistent concerns over the eurozone debt crisis and a drop in futures contract prices on the Tokyo Commodity Exchange.
By Friday, the Malaysian Rubber Board’s benchmark SMR20 fell to 287.95 US cents a kilo from 294.75 cents the previous week.