Commodities prices rose on Friday, with crude oil firming well above $70 a barrel on the back of optimism about the global economic growth and US dollar weakness.
“Market participants attribute these steep gains to economic optimism and rising equity markets,” said Eugen Weinberg, commodities analyst at Commerzbank in Frankfurt. “Fundamental data do not justify the current oil price level, however, and we expect a sharp price correction for crude oil in the foreseeable future.”
In early trading, Nymex October West Texas Intermediate, the US benchmark, rose 71 cents to $73.20 a barrel, recovering from Thursday when it briefly tested the $70 a barrel support. ICE October Brent, the European benchmark, rose 73 cents to $73.24.
US natural gas prices remained depressed, with the Nymex October natural gas contract trading at $3.20 per million British thermal unit, down 0.2 per cent. The Nymex September contract expired on Thursday at a seven-year low of $2.69 per mBtu.
The energy market will turn its attention soon to the Opec oil cartel’s meeting in Vienna on September 9. Ed Meir, of brokerage MF Global in New York, said nonetheless that the meeting “should not cause much of a reaction in the markets either, as the cartel will more than likely stand pat”.
“Price wise, we expect values to remain range bound over the next several days, with WTI basis October unlikely to deviate much from its $68.25-$73.50 range,” he said.