Commodity prices recovered some ground on Tuesday, after the previous session’s sell-off, led by rising crude oil and base metals prices, but sentiment remained cautious.
Edward Meir, of brokerage MF Global in New York, said that the commodities market had been discounting a V-shaped economic recovery since March and warned that recent economic indicators had been “quite erratic”. The fragility of the recovery was highlighted by the US natural gas market, where prices were near a 7-year low.
Analysts warned that some investors, sitting on top of large gains from commodities bets made earlier this year, could still sell in the near term to lock in some profits. The spot S&P GSCI, the commodities index, has surged 27.6 per cent since January.
In the energy market, Nymex September West Texas Intermediate rose in morning trading in London 95 cents to $67.70 a barrel. The September contract will expire on Thursday and the Nymex October WTI contract traded at $69.57 a barrel.
ICE October Brent rose 70 cents to $71.24 a barrel.
Stephen Schork, a former trader at the Nymex floor and editor of the “Schork Report” said the recent weakness in oil prices was nothing “but noise inside a well defined range between the high $50s and the low $70s” that has been in place for several weeks.
Natural gas prices regained some ground, but prices were near the lowest level in seven years. In early trading, Nymex September natural gas rose 1.8 per cent to $3.220 per million British thermal units, up from Monday’s low of $3.117 per mBtu, the lowest since October 2002.