Raw material prices won support this week from upbeat Chinese economic data, while cocoa futures hit 11-month high points on tight supply fears, analysts said.
OIL: Oil prices fell over the week despite a rally on Friday in the wake of strong Chinese industrial output data that bolstered the outlook for the world’s top energy consumer.
Oil prices had dropped the previous four days on improving global supplies and owing to weakness across equity markets caused by concerns that the Federal Reserve could soon begin to withdraw its massive stimulus programme, traders said.
The International Energy Agency (IEA) on Friday trimmed its outlook for world oil demand growth over the next 18 months and highlighted threats to the dominance of producer cartel Opec.
But this was offset by official data showing that China’s industrial production growth accelerated in July to a five-month high of 9.7% year-on-year.
July’s factory output figure, higher than June’s 8.9%, exceeded analyst expectations.
The country also posted lower-than-expected inflation, which held steady at 2.7% in July, marginally below market expectations of 2.8%, potentially giving the Chinese government more room to stimulate the economy.
The IEA, meanwhile, said that new data on the difficulty the global economy is having in picking up speed meant that demand for oil would grow by slightly less than it had foreseen in July.
The critical underlying factors are the rise of North American shale energy and the threat this poses to Opec, the IEA said, referring to debate over whether the Organisation of Petroleum Exporting Countries may have had its day.
The agency said that it was trimming its forecast for growth of global oil demand this year by 30,000 barrels per day to 895,000 barrels per day because the International Monetary Fund had lowered its forecast for growth of the global economy from 3.3% to 3.1%.
Oil prices had rallied the previous week, with Brent crude reaching a near four-month high above $110 a barrel before giving way to profit-taking in the wake of disappointing US employment data.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September fell to $107.52 a barrel from $108.92 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September slipped to $105.41 a barrel from $106.81 a week earlier.
BASE METALS: Base or industrial metal prices rallied on Friday’s positive Chinese data as well as thanks to strong export figures out of China the previous day.
“Although the Chinese trade numbers mostly highlighted the progress of copper this had a positive impact on all metals,” said brokers Triland Metals.
China’s imports and exports showed an unexpected jump in July, government data showed on Thursday in a positive sign for the Chinese economy, the world’s second-biggest after the US economy, after persistent weakness raised concerns over growth.
“One company that isn’t overly confident about a Chinese recovery later this year is Rio Tinto,” said Craig Erlam, market analyst at Alpari trading group, after the mining giant reported a 71% slump in first-half net profit.
“While the company does not expect a hard landing, it did give a pretty gloomy outlook for the Chinese economy which, along with low commodity prices, it expects to weigh on profits in the second half of the year.”
By Friday on the London Metal Exchange, copper for delivery in three months jumped to $7,276 a tonne from $7,063 a week earlier.
Three-month aluminium climbed to $1,865.75 a tonne from $1,822.
Three-month lead rose to $2,174 a tonne from $2,123.
Three-month tin increased to $22,140 a tonne from $21,030.
Three-month nickel advanced to $14,700 a tonne from $13,982.
Three-month zinc gained to $1,945 a tonne from $1,881.25.
PRECIOUS METALS: Gold futures rallied on Friday to end steady over the week. “The higher than expected import growth indicates a Chinese domestic demand recovery, which will bode well for gold demand,” said brokers Sharps Pixley.
By late Friday on the London Bullion Market, the price of gold stood at $1,309 an ounce compared with $1,309.25 a week earlier.
Silver climbed to $20.31 an ounce from $19.46.
On the London Platinum and Palladium Market, platinum rose to $1,492 an ounce from $1,436.
Palladium gained to $739 an ounce from $730.
COCOA: Prices reached 11-month peaks in London and the highest levels for eight months in New York trading on dry weather in leading producer Ivory Coast.
“The lack of moisture could have a negative impact on the main harvest, which is due to begin in October,” said analysts at Commerzbank in a note to clients.
London prices hit a peak at £1,671 a tonne and New York futures rose as high as $2,525 a tonne on Thursday.
By Friday on Liffe, London’s futures exchange, cocoa for delivery in December stood at £1,638 a tonne compared with £1,569 for the expired September contract a week earlier.
On New York’s Nybot-Ice exchange, cocoa for December traded at $2,464 a tonne compared with $2,294 for the expired September contract a week earlier.
COFFEE: Futures rebounded from four-year lows struck a week earlier as Brazil moved to support the incomes of farmers.
Markets were meanwhile still betting on a record harvest in leading producer Brazil, capping price gains.
“Earlier this week the Brazilian government announced a new price support scheme for coffee farmers. The scheme is designed to put a floor under the price of Arabica which has slumped over the last two years,” noted Thomas Pugh, analyst at research group Capital Economics.
By Friday on Nybot-Ice, Arabica for delivery in September grew to 122.75¢ a pound from 117.05¢ a week earlier.
On Liffe, Robusta for November advanced to $1,928 a tonne from $1,857.
SUGAR: Prices extended gains as Brazil’s predicted output was revised lower.
By Friday on Nybot-Ice, the price of unrefined sugar for delivery in October increased to 16.84 US cents a pound from 16.74 cents a week earlier.
On Liffe, the price of a tonne of white sugar for October climbed to $495.20 from $487.90.
