Oil, metals rebound

Crude oil rose from a 12-week low, and copper and nickel increased, after a European loan package worth almost $1 trillion and a program of bonds purchases eased investors’ concerns that Europe’s sovereign debt crisis may spread and derail a global economic recovery.

Oil jumped as much as 4.5 per cent to $78.51 a barrel, the biggest intraday increase since September 30. Copper, which slumped 6.5 per cent last week, gained 3.5 per cent to $7,185 a tonne and nickel advanced as much as 4.9 per cent.

The 16 euro nations agreed to lend as much as ¤750 billion ($962 billion) to countries under attack from speculators. The European Central Bank said it would buy government and private debt. The Reuters/Jefferies CRB Index of 19 raw materials plunged 5.9 per cent last week, the most since December 5, 2008, on concerns the Greek debt problems would spread.

The declines in commodity prices presented a “buying opportunity,” Goldman Sachs Group Inc’s analysts led by Jeff Currie in London said in a report today.

“We remain most constructive on crude oil, copper and precious metals, with copper in particular looking particularly attractive post the recent severe selloff,” they said in the report. Goldman maintained its 12-month outlook for returns from commodities at 17.6 per cent. The bank’s forecast relates to the S&P GSCI Enhanced Total Return Index.

Crude oil for June delivery rose 3.3 per cent to $77.61 on the New York Mercantile Exchange, after falling to $74.51 on May 7, the lowest close since February 12 and losing almost 13 per cent last week. Copper for three-month delivery advanced 2.8 per cent to $7,140.50 and nickel added 3.3 per cent after last week’s 14 per cent plunge.

Crude oil prices will likely return to $80 to $85 once the debt crisis in Greece is resolved, Algerian Energy Minister Chakib Khelil said yesterday.

The emergency package “lifted the equities markets and commodities,” Eugen Weinberg, senior commodity analyst at Commerzbank AG, said today by phone from Frankfurt. The rebounds for oil and industrial metals today didn’t completely offset losses in recent weeks, he added.

Oil and industrial metals may decline in the next six months, Weinberg said, citing oversupply as a trigger for further price corrections.

Sugar climbs
“In the next few days there will be some recovery of risky assets including commodities,” said Charles Morris, who manages $2.5 billion at HSBC Global Asset Management’s Absolute Return fund in London. Morris said he maintained gold as the largest commodity holding in his fund, at about 11 per cent of the fund this year.

Raw sugar for July delivery rose 0.69 cent, or 5 per cent, to 14.44 cents a pound on ICE Futures US in New York. It earlier climbed as much as 5.8 per cent, the biggest gain for a most-active contract since April 19.

White sugar for August delivery advanced $13.10, or 3 per cent, to $450.90 a tonne on London’s Liffe exchange at 11.46 am local time. It earlier jumped 4.7 per cent, the biggest gain since April 12.