Commodity markets showed signs of stabilising Friday after a volatile week.
Crude prices rebounded with ICE September Brent up 62 cents at $75.80 a barrel and Nymex September West Texas up $1.05 at $76.00.
For the week, Brent fell 2.3 per cent but WTI rose 0.3 per cent. WTI this week overtook Brent for the first time since February as more US refineries have come back on stream, raising demand for US crude.
The IMF warned in its latest global update that “the risk of an oil price spike remains a concern”.
The Organisation of the Petroleum Exporting Countries played down the impact of near-record oil prices on global economic activity amid ongoing pressure on Opec to raise production.
Gold fell 3.3 per cent to $662.30 a troy ounce over the week as hedge funds liquidated profitable positions. Gold has not benefited as a safe haven in spite of rising risk aversion.
James Steel, at HSBC, said there had been a strong positive correlation between gold and emerging market equities in the past two years. “Investors are finding the costs of financing riskier trades in emerging markets are rising. As these markets have been subject to heavy investor liquidation, so too has the gold market.”
Base metals retreated as risk aversion rose this week. Copper fell 4 per cent to $7,785 a tonne this week but found support Friday after Codelco suspended production at the El Teniente division, home to the world’s largest underground mine.
Lead dropped 14.6 per cent to $2,990 a tonne this week after reaching a record $3,500 last Friday.
The Baltic Dry Index, the best gauge of the global bulk shipping costs, rose 4.4 per cent this week to a record 6,890 points Friday.
The index set fresh records every day this week, propelled by strong demand for bulk commodities such as iron ore and coal, and congestion at ports in Australia and Latin America.
Shipping costs are also being lifted by tightness in global grain markets. Lower European wheat exports are forcing some countries, such as Bangladesh, to buy US wheat, lengthening trade routes.
Wheat prices rose on both sides of the Atlantic, because of concerns about the European harvest as estimates for the French and German crop were cut. More rain is forecast for Europe’s producing regions this weekend.
November milling wheat futures rose 9 per cent to €209 a tonne and touched €213 a tonne Friday, the highest price since the contract was launched in 1998.
In Chicago, CBOT September wheat gained 5.1 per cent to $6.48 a bushel, after hitting an 11-year high at $6.64 on Thursday. Rising wheat prices supported corn since US farmers use both as animal feed. CBOT September corn was flat over the week at $3.18 a bushel. CBOT September soyabeans fell 4.1 per cent to $8.15¼ a bushel for the week.