oil rallies on geopolitical tensions

Market might bounce tomorrow


By Sarah O’Connor

Published: July 28 2008 11:20 | Last updated: July 28 2008 11:20

Commodity prices rose across the board on Monday following a fortnight of sharp falls. Oil climbed more than $1 a barrel, grain prices rose on concerns about dry weather in the US next month, and base metals recovered their poise.

Nymex September West Texas Intermediate rose $1.27 to $124.53 a barrel and ICE September Brent climbed $1.25 to $125.83 a barrel, both contracts rebounding from Friday’s seven-week lows. Analysts said the move looked like a technical bounce, helped by geopolitical upheaval after bombs exploded in India and Turkey.

Nigerian militants also helped put a floor under oil prices, saying they had attacked two oil pipelines on Monday. Pipeline owner Royal Dutch Shell said it could not confirm if production had been affected.

Analysts at MF Global said they could see crude oil stage a modest recovery from the $122 a barrel mark, but they suspected it would be short-lived.

Gold prices edged higher in line with oil, up 0.3 per cent in London to $934.40 an ounce.

Corn, soybean and wheat prices rose on forecasts of dry weather in the US next month. Hopes for strong global demand were raised by a report in the Kargozaran newspaper that Iran needed to import 1 million tonnes of wheat each month until March next year.

In Chicago, CBOT September corn rose 7¼ cents to $5.84½ a bushel, CBOT September wheat added 12 cents to $8.23 a bushel and CBOT August soyabeans gained 12¼ cents to $14.11 a bushel.

Monday’s moves in agricultural markets accelerated a modest rebound begun mid last week, taking corn, wheat and soyabean gains since then to more than 7 per cent, 6 per cent and 3 per cent respectively.

Base metals continued to rise after a strong session on Friday. Metals that missed out on Friday’s gains like zinc and lead posted the biggest rises on Monday, up 1.1 per cent and 1.9 per cent respectively. Copper rose 0.2 per cent to $7,995 a tonne and aluminium was flat at $2,976 a tonne.