The prices of oil and base metals followed the hopes and reports around the growth prospects. During the first week of December, oil recorded gains on the back of accelerating economic expansion in United States. The optimism was further strengthened by deal on a new debt target by Greece and U.S lawmakers would reach an agreement in time regarding the fiscal cliff deal. The positive signs of industrial demand revival in China and improved US housing numbers helped the base metals end the week in the positive.
However the second week of December saw the oil prices record loses on the concerns about the uncertainty of leaders on U.S fiscal cliff deal. Additional supply than demand also sent signs of lowered spending from the businesses. Copper managed to score high during the week based on positive U.S jobs data. Fed’s decision to inject more stimulus to support the recovery of Jobs market in U.S. subsequently weakened the dollar and boosted the crude oil prices during the third week.
With the reports of increasing demand for diesel and heating oil due to increased industrial activity in U.S., crude oil posted profits during the fourth week. Positive data from China and fed’s announcement helped the base metals record a strong week. Crude oil ended the year on a positive note on the back of higher U.S home prices and hopes of a positive decision on fiscal cliff deal which was due on the last day of the year. Copper also ended the year on a positive note on the back of positive industrial data from the largest metal consumer, China.
Fall in supply and hopes of increased demand on the back of increased hiring in U.S and lesser unemployment rate helped crude oil start the New Year on a positive note. Increased demand for copper in China made investors drive the copper prices higher. However high Inflation rates in China raised concerns over continuing the existing stimulus plans. Crude oil recorded negative during the second week.
Copper continued its upward trend because of weak dollar and increased exports demand in China. With china continuing the aggressive stimulus plan, crude oil recorded a four – month high during the third week of January 2013. Crude and Copper traders remained bullish during the last week of January. Both Crude and Copper had good rallies on the speculation that economies in U.S and China are back on track and this will increase the demand for these commodities.
The focus during the month of January mainly remained on the earnings posted by the firms during the third quarter. A few corrections in the commodity markets are expected during the coming weeks.