Commodities rose for the first time in five days as crude oil rebounded on renewed concern about supply disruptions amid increasing Middle East tension.
The Standard & Poor’s GSCI Spot Index of 24 commodity futures climbed 1.6 percent to 684.32 as of 12:04 p.m. in London after plunging 3.8 percent yesterday, the most since July 2009. Crude oil advanced as Bahrain suspended stock-market trading after the government declared a state of emergency. Gulf-nation troops poured into the island country, which is off of Saudi Arabia, the largest oil exporter.
“What people have in the back of their mind is the Middle East,” said Michael Haigh, global head of commodities research at Standard Chartered Plc, in Singapore. “Disruptions in the Middle East and places like Libya tend to be long-lasting.”
The GSCI index has advanced 8.3 percent this year, with gains in the past month coming mostly from political unrest that started in Tunisia and spread to Egypt, Libya and Bahrain, sparking speculation oil supply may be disrupted.
Libya’s oil exports may be halted for “many months” because of damage to facilities and sanctions following a rebellion against leader Muammar Qaddafi, the International Energy Agency said in its monthly Oil Market Report.
The Middle East unrest outweighed concerns about radiation from a Japanese nuclear plant damaged by the country’s strongest earthquake on record and subsequent tsunami. The country is the world’s third-biggest user of crude oil, the top importer of corn and the second-largest buyer of copper ore.
Military helicopters were deployed to drop water on the crippled Fukushima Dai-Ichi power plant as officials battling to prevent a meltdown said fuel rods at two reactors may have been damaged and temperatures at spent fuel pools were rising.
Clouds of white smoke or steam rose from the reactor buildings following a fire at Dai-Ichi’s No. 4 reactor this morning. Chief Cabinet Secretary Yukio Edano said radiation levels at the plant then rose, forcing a brief evacuation, but have since fallen. About 70 percent of the fuel rods at the plant’s No. 1 reactor and a third of the No. 2 reactor’s fuel may have been impaired, Tokyo Electric Power Co. said. The Dai- Ichi nuclear complex has six reactors.
“Investors’ greatest worry is a meltdown of that nuclear plant,” Ker Chung Yang, an analyst at Phillip Futures Pte, said today by phone from Singapore. “It is less than a week after the Japanese quake. The outlook is still uncertain.”
Oil for April delivery gained 2 percent to $99.11 a barrel on the New York Mercantile Exchange after falling as much as 1 percent to the lowest level in more than two weeks. About 1.3 million barrels a day, or 29 percent, of Japan’s refining capacity was closed after the temblor and tsunami.
Copper rose for the first time in six days on speculation reconstruction in Japan will boost demand. The contract for three-month delivery on the London Metal Exchange added as much as 2.9 percent to $9,382 a metric ton and last traded at $9,341.75.
“Following the steep losses in the last few days, the price now looks attractive to some buyers,” Li Peiying, an analyst at Essence Futures Co., said by telephone from Beijing. “People have started to shift their attention to the rebuilding that will boost demand in the next few months.”
Corn for May delivery dropped as much as 2 percent to $6.235 a bushel, the lowest level for the most-active contract in two months, before erasing the decline and adding 1.1 percent to $6.4275.
Declines in commodity prices because of the Japanese earthquake are likely to be temporary, according to Standard Chartered’s Haig. “We expect a V-shaped recovery” that will boost demand for steel and industrial metals, he said.
To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com