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COMMODITIES-Oil up on fears over Syria; grains jump after 2-day drop
July 25, 2012 / 8:40 PM / 5 years ago

COMMODITIES-Oil up on fears over Syria; grains jump after 2-day drop

 * Oil rebounds from early loss; investors worry about Syria
 * Soybeans, wheat up about 3 pct on renewed crop worries
 * Copper buoyed by Wall Street, hopes of Fed stimulus
 By Barani Krishnan
 NEW YORK, July 25 (Reuters) - Oil rose on Wednesday on fear
about Syria's threat to use chemical weapons, and U.S. grains
rebounded strongly from a two-day selloff on renewed worries
about drought-ravaged crops.
 Copper rose slightly, rebounding from an early
tumble with lift from a rise in Wall Street stocks and
growing appetite for risk after a report that Federal Reserve
officials were moving toward more steps to aid the U.S. economy.
 The Thomson Reuters-Jefferies CRB index, the
commodity market bellwether, settled up 0.3 percent; at its
session low it was down 0.6 percent.
 The rebound was largely driven by U.S. crude oil, which
accounts for nearly a quarter of the CRB's weighting. Thirteen
of the 19 commodities on the index ended up.
 "The geopolitical risk is out there, with worries about
Syria and chemical weapons if they got into the wrong hands, and
there is positive sentiment about the Fed and (potential)
stimulus," said Gene McGillian, analyst at Tradition Energy in
Stamford, Connecticut.
 Syria acknowledged for the first time on Monday that it had
chemical and biological weapons and said it could use them if
foreign countries intervened in its civil war.
 "These weapons are stored and secured by Syrian military
forces and under its direct supervision and will never be used
unless Syria faces external aggression," Syria's Foreign
Ministry spokesman Jihad Makdissi said.
 Markets remained spooked by Makdissi's remarks on Wednesday
despite Russia saying it had clearly told the Syrian government
it was unacceptable to threaten the use of chemical weapons.
 
 Fear over the Syrian situation helped the front-month
contract for U.S. crude settle up 47 cents at $88.97 at
barrel. U.S. crude rebounded from a session low of $86.84.
 London's benchmark Brent crude finished up 96 cents
at $104.38.
 Earlier in the session, oil fell on euro zone worries and
after U.S. government data showed an unexpected rise in domestic
crude stockpiles last week.
 Latest global economic readings added to investors concerns,
with Britain's GDP contracting more than expected in the second
quarter after the slump in German and French manufacturing
activity reported on Tuesday.
 Data showing the biggest drop in more than a year in U.S.
single-family home sales in June also weighed on oil as it
reflected a sluggish recovery for the housing market -- one of
the pillars of the U.S. economy. 
 While the weaker housing market was in a way a drag on oil,
it also reinforced expectations that the Federal Reserve would
act to adopt more quantitative easing to support the economy.
 "U.S. economic data today on home sales tell us that the
optimism about the economy in the first and second quarters
realistically had no foundation," said Sean McGillivray, vice
president at Great Pacific Wealth Management in Grants Pass,
Oregon.
 
 GRAINS CLAW BACK FROM 2-DAY SELLOFF
 U.S. soybean, wheat and corn futures rose, clawing back some
of the losses from earlier in the week on renewed worries about
parched crop fields in the U.S. Midwest. 
 Some rain was in the forecast for the next 10 days in
northern and eastern parts of the Corn Belt, but large growing
areas in Iowa, Illinois and Nebraska should remain dry.
 "The reality of it is we are going to have to see how much
rain we are going to actually get," said Sterling Smith, analyst
with Citigroup said. "The drought is not over yet." 
 Soybeans led the way higher, rising nearly 3 percent
to above $16.94 a bushel, as the market edged back toward record
highs set late last week. Wheat also rose almost 3 percent, to
above $9.03 and nearing a four-year high. 
 "Even if the weather takes a turn for the better here in the
last few stages of the crop's development, we are still looking
at a pretty tight stocks situation," said Nicole Thomas, analyst
with McKeany-Flavell. We need to get some price rationing.  
 Prices at 4:26 p.m. EDT (2026 GMT)      
                          LAST/      NET    PCT     YTD
                          CLOSE      CHG    CHG     CHG
 US crude                    88.97     0.47   0.5%  -10.0%
 Brent crude                104.43     1.01   1.0%   -2.7%
 Natural gas                 3.070   -0.117  -3.7%    2.7%
 
 US gold                   1609.30    31.80   2.0%    2.7%
 Gold                      1604.00    24.16   1.5%    2.6%
 US Copper                  337.45     2.15   0.6%   -1.8%
                           
 Dollar                     83.558   -0.447  -0.5%    4.2%
 CRB                       297.240    0.870   0.3%   -2.6%
 
 US corn                    782.50    11.00   1.4%   21.0%
 US soybeans               1615.50    46.00   2.9%   34.8%
 US wheat                   910.00    24.75   2.8%   39.4%
 
 US Coffee                  176.30     0.85   0.5%  -22.7%
 US Cocoa                  2230.00    21.00   1.0%    5.7%
 US Sugar                    23.36     0.17   0.7%    0.6%
 
 US silver                  27.466    0.655   2.4%   -1.6%
 US platinum               1396.90    12.80   0.9%   -0.6%
 US palladium               565.25     3.65   0.6%  -13.9%
 
 (Editing by Bob Burgdorfer and David Gregorio)
 

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