Commodities gained for a second consecutive day, led by oil after fighting in Libya intensified, renewing concern that Middle East supplies may be further threatened in Africa’s third-largest fuel producer.
The Standard & Poor’s GSCI Spot Index of 24 commodity futures gained as much as 1.2 percent after falling 0.4 percent. Prices dropped earlier today amid speculation Japan’s earthquake will curb demand.
Crude oil in New York rose as much as 1.3 percent to $99.20 a barrel, reversing an earlier loss of 1.4 percent, taking this year’s gain to 8.4 percent. The fuel climbed as much as 2.5 percent yesterday as violence in Bahrain increased concern that unrest will spill into Saudi Arabia.
“Gains were fragile, as Japan tensions remain,” Deutsche Bank AG’s analysts Adam Sieminski and Xiao Fu said in a report today. Crude prices were “underpinned by escalating uncertainties in Libya, Bahrain and Yemen,” they said.
Bahraini police arrested at least four opposition leaders a day after imposing a military curfew on parts of the country and forcing protesters from a central roundabout in the capital. Libyan leader Muammar Qaddafi’s warplanes bombed the Benghazi airport, rebels said, bringing the war to the opposition stronghold for the first time as the United Nations Security Council prepares to debate action.
The S&P GSCI has advanced 8.4 percent this year, partly driven by political unrest in the Middle East and North Africa that cut oil output in Libya and threatens disruptions in other producing countries. The increase has been limited by the magnitude-9.0 earthquake that hit Japan on March 11, prompting investors to sell commodities on speculation demand will drop.
Nuclear Crisis
In Japan, more than 300 workers are racing to prevent a meltdown and spread of radiation at the crippled Fukushima Dai- Ichi power station today, an increase from a core group of 50 engineers yesterday, Tokyo Electric Power Co. said.
Japan is the world’s third-largest user of crude, the top importer of corn and second only to China in terms of copper-ore purchases.
Workers plan to connect a power line to start damaged cooling systems later today and intend to spray water on a damaged reactor from a cannon used by the police for riot control, Tepco spokesman Kaoru Yoshida said. Helicopters doused 30 metric tons of water on pools used to cool spent fuel rods. No change in radiation levels was reported after four bombing runs, Kyodo News said, citing Tepco.
“From the beginning to now, the situation in Japan seems to be getting worse and impacting commodity prices.” Dominic Schnider, director for wealth management research at UBS AG in Singapore, said today by phone.
Derailed Recovery
Immediate-delivery gold was little changed at $1,397.75 an ounce after dropping as much as 0.9 percent earlier, while copper advanced 0.9 percent to $9,340 a ton on the London Metal Exchange.
“Japan is a big economy; if we do have some sort of nuclear meltdown it will have big macro-economic impacts and that could derail the recovery,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by phone today.
“The commodity markets are jittery and do remain heavily focused on the impacts of the Japan nuclear power plant situation,” Westmore said.
Foreign governments including the U.S. and the U.K. advised their citizens to consider leaving Japan, as the Asian nation’s Chief Cabinet Secretary Yukio Edano urged people not to panic.
Japan’s Nuclear and Industrial Safety Agency said today there is a possibility of no water at the No. 4 reactor spent- fuel cooling pool. The agency has detected no smoke or steam rising from the reactor, spokesman Hidehiko Nishiyama said.
‘Major’ Disaster
“We are somewhere between a disaster and a major disaster,” EU Energy Commissioner Guenther Oettinger told a European Parliament committee yesterday.
Spot platinum fell as much as 2.2 percent to $1,657.75 an ounce, the lowest intraday price since Dec. 1, and palladium lost as much as 1.5 percent to $688.25, lowest since Nov. 30. Prices of the metals used for pollution-control devices in cars dropped as Japanese carmakers including Toyota Motor Corp., the world’s largest, halted operations following the quake.
Farm products were the biggest gainers. Corn for May delivery climbed as much as 2 percent to $6.2875 a bushel on the Chicago Board of Trade. The price closed at the lowest level in two months yesterday. Wheat for May delivery climbed 2.3 percent to $6.77 a bushel after yesterday dropping to $6.56, the lowest price since Oct. 6.
“End-users snapped up purchases after values tumbled, which is helping prices creep up,” said Han Sung Min, a senior trader at Seoul-based Korea Exchange Bank Futures Co. “The rebound may be short-lived because investors remain jittery.”
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