As Pipeline Headaches Continue, Crude Hits Record, Flirts With $120
Worsening production woes in Nigeria and Britain took crude oil to new record highs before it pared gains to close higher Monday. Metals prices also rose.
In agricultural markets, U.S. corn futures hit record highs and wheat rose as well, while soybeans fell.
Other food-based commodities saw mixed fortunes, with U.S. arabica coffee up and cocoa and sugar down.
The Reuters-Jefferies CRB index of 19 commodity futures climbed a modest 0.4%.
Crude oil aside, commodities were reacting to a slightly weaker dollar amid speculation that the Federal Reserve may cut interest rates this week to prop up the economy.
Investors in financial markets are broadly expecting the Fed to cut benchmark borrowing rates by a quarter-point Wednesday, as some analysts think America still faces threats of recession from a festering credit crisis.
In oil, U.S. crude settled up 23 cents at $118.75 a barrel after hitting a record $119.93 the second time in a week that it came just short of the $120 mark eyed by bulls.
London Brent crude settled up 40 cents at $116.74.
Crude prices have surged more than 400% since 2002 and are up almost 25% since the start of the year, as global supplies struggle to keep pace with rising demand in emerging economies such as China.
The latest run-up is mainly due to problems in Nigeria and Britain, which have taken down nearly 2 million barrels per day of oil output in the Atlantic Basin.
In Britain, the 700,000 bpd Forties North Sea crude oil pipeline remained closed Monday due to a strike at the 210,000 bpd Grangemouth refinery over pensions.
The rally in oil helped U.S. gold futures for June delivery settle up $5.80 at $895.50 an ounce on the Comex division of the New York Mercantile Exchange.
Among industrial metals, copper prices closed slightly higher Monday, helped by a nearly two-week-long strike at Chile’s Codelco, the world’s largest copper producer.
Comex’s most-active copper futures for May settled up 2.00 cents, or 0.51%, at $3.9355 per pound in New York, after trading between $3.8970 and $3.9500.
Copper for delivery in three months on the London Metal Exchange closed up $75 at $8,650 a metric ton. It had hit a three-week low of $8,370 on Friday.
The front May corn contract settled up 22 3/4 cents at $6.00 per bushel on the Chicago Board of Trade. New-crop futures for December delivery climbed 23 1/2 cents to settle at $6.30 1/4.