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Commodities markets summary

Reported by AAP
Friday, October 24, 2014
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A summary of trading in key commodities markets overseas:

ENERGY

Oil prices have rebounded from a two-year low in New York on encouraging Chinese and German economic data and reports of Saudi Arabia cutbacks.

US benchmark West Texas Intermediate for December delivery advanced $US1.57 on Thursday to close at $US82.09 a barrel on the New York Mercantile Exchange. The WTI futures contract closed Wednesday at its lowest level since late June 2012.

Brent North Sea crude for December jumped $US2.12 to settle at $US86.83 a barrel in London trade.

"Oil prices saw a strong turnaround today on the news Saudi Arabia cut its crude supply to the market in September, and signs from China and Germany that the global growth situation maybe not as gloomy as expected," said CMC Markets analyst Jasper Lawler.

British banking giant HSBC's preliminary manufacturing purchasing managers index (PMI) for China showed a slight uptick, to 50.4 in October from 50.2 in September, easing concerns about slowing economic growth in the world's largest energy consumer.

Meanwhile, Markit's PMI for Germany rose to 54.3 in October from 54.1 in September, with manufacturing rising at the fastest pace in three months but still well below the levels seen at the start of the year.

The WTI contract also benefited from rallying Wall Street stocks on the back of good company earnings, said Andy Lipow of Lipow Oil Associates.

PRECIOUS METALS

Gold futures retreated on Thursday as upbeat economic data pushed US equities higher, reanimating investor appetite for risk and damping interest in haven assets.

The most actively traded contract, for December delivery, fell $US16.40, or 1.3 per cent, to settle at $US1,229.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

This was the lowest settlement since October 10, when futures closed at $US1,221.70 an ounce.

Gold and other haven assets gave way to pressure from upbeat economic data. Manufacturing activity in China and Europe improved in October, while US economic activity grew at above-historic trend.

"As the fear comes out of the market, the investment comes out of gold," said Frank McGhee, head precious metals dealer with Integrated Brokerage Services LLC in Chicago.

Investors tend to hoard protective assets like gold, Treasurys and the yen during periods of uncertainty, but cut back on such holdings in favour of stocks and other investments that benefit from economic growth when the outlook brightens.

The shift away from gold comes as the US stock market continues to recover from a swift downdraft that saw equities post four straight weeks of declines and the Dow Jones Industrial Average erase its gains for the year.

BASE METALS

Copper futures rose Thursday as stronger manufacturing activity in China and Europe bolstered investor hopes of increased demand for the industrial metal.

The most actively traded contract, for December delivery, rose 2.25 cents, or 0.8 per cent, to settle at $US3.0400 a pound on the Comex division of the New York Mercantile Exchange.

The preliminary HSBC China Manufacturing Purchasing Managers' Index rose to 50.4 in October, from a final reading of 50.2 in September, HSBC Holdings PLC said Thursday. A reading above 50 points to expansion from the prior month.

Copper prices slumped to seven-month lows last week on worries that slower global growth would shrink demand for the industrial metal. Copper is widely used in manufacturing and construction, making its prices sensitive to shifts in economic outlook.

On Thursday, copper got an extra boost from data showing business activity in the eurozone's private sector picked up slightly in October, with the Markit composite purchasing managers' index climbing to 52.2 from 52.0 in September. A reading above 50 points to expanding activity.

"Copper traders are cautiously entering new positions at this point," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

26/10/2014 18:45Sydney, Australia. 26 October,2014
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