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COMMODITIES-Oil up 6 pct as demand rises; copper, grains follow
February 25, 2009 / 9:32 PM / 9 years ago

COMMODITIES-Oil up 6 pct as demand rises; copper, grains follow

* Crude oil jumps on gasoline draw

* Copper up 2.5 pct; corn, wheat rise too

By Barani Krishnan

NEW YORK, Feb 25 (Reuters) - Signs of a recovery in U.S. energy demand boosted crude oil prices by 6 percent on Wednesday, helping copper and grains markets to a higher close as well.

Gold continued its losing streak, closing down for a third straight session as investors backed away from the so-called “safe haven” after rediscovering an appetite for oil and other riskier commodities. The dollar’s persistent strength [USD/] also weighed on the precious metal.

The Reuters-Jefferies CRB index .CRB of 19 futures markets settled up 2.2 percent.

In crude oil CLc1 , the benchmark contract on the New York Mercantile Exchange, or NYMEX, settled up $2.53 at a near one-month high of $42.50 a barrel after a U.S. government report showed lower gasoline inventories in the world’s top energy consumer. [O/R]

“The big draw is in gasoline. Demand is up and refinery runs are lower than expected. Demand is coming back,” said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York.

Analysts said low gasoline prices seemed to be luring U.S. motorists back to the roads, as U.S. gasoline inventories indicated a drop of 3.4 million barrels last week. [ID:nN12445605]

NYMEX crude had hit record highs above $147 a barrel in July before the global economic downturn sent the market hurtling to as low as $32 a barrel in December and January. Production cuts in recent months by oil cartel OPEC have kept prices from sliding further.

In U.S. copper futures, the benchmark contract for March delivery HGH9 ended up 3.75 cents, or 2.5 percent, at $1.5245 a lb on the COMEX metals division of NYMEX. [COP/X]

Copper for delivery in three months MCU3 on the London Metal Exchange (LME) ended up $130 at $3,415 a tonne. [MET/L]

Prices of the industrial metal have tumbled since July’s record highs above $4 a lb on COMEX and nearly $9,000 a tonne on the LME.

But since Friday, copper has been on the rebound on technical buying and short-covering. This trend accelerated after Federal Reserve Chairman Ben Bernanke said on Tuesday that U.S. banks were not about to be nationalized.

“The fact that the U.S. isn’t going to nationalize the banking system has alleviated some of the fear. That boosted the stock markets, and that has lent a little extra support to metals,” said Leon Westgate at London’s Standard Bank.

In gold, COMEX’s benchmark contract for April GCJ9 settled down $3.30 at $966.20 an ounce. [GOL/X] [GOL/]

On the agricultural front, wheat and corn prices also turned higher on short-covering and bargain buying, although gains were limited by concerns over a shrinking global economy and waning demand for grains and soy. [GRA/]

U.S. corn for delivery in March CH9 settled up 9-1/2 cents at $3.63-3/4 a lb on the Chicago Board of Trade. March wheat WH9 also ended up 9-1/2 cents at $5.24-3/4 per bushel. (Editing by David Gregorio)

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