Oil prices rose on Friday but base metals were mixed and sugar prices staged a modest correction as commodity markets paused for breath after strong gains in the previous session.
In energy markets, Nymex September West Texas Intermediate rose 28 cents to $70.80 a barrel while ICE September Brent gained 47 cents at $73.95 a barrel.
“We expect oil prices to remain range-bound in the third quarter before moving higher on evidence of improving demand in the fourth quarter, underpinned by a weakening US dollar and improving risk appetite,” said Helen Henton, head of commodities reseach at Standard Chartered bank.
Ms Henton said she did not expect Opec to change its output policy at its next meeting on 9 September, but compliance among the cartel members with agreed production quotas had weakened a little as oil prices have increased.
“OPEC’s spare capacity is currently around 5.5m bd, so there is ample scope to expand production as demand tentatively recovers. This margin will be gradually eroded as demand growth returns. We do not expect this to happen until beyond 2010,” said Ms Henton.