Commodities Advance After U.S. Jobs Report Signals Growth

Commodities extended gains, with crude oil and metals rising after the U.S. jobs report signaled economic growth.

The Standard & Poor’s GSCI Index of 24 commodities climbed 1.2 percent to 692.33 by 4:26 p.m. in London, after earlier falling as much as 3.6 percent. In New York, copper rose 1 percent and crude oil gained 1.5 percent.

“Today’s economic data from the U.S. took some of the pressure off the market and prices recovered across the board after a strong correction in the first part of the day,” Eugen Weinberg, head of commodity research at Commerzbank AG in Frankfurt, said by telephone. “We see current levels as a good entry point for long-term investors.”

Payrolls increased by 244,000 workers last month, the biggest gain since May 2010, after a revised 221,000 gain the prior month, the Labor Department said today in Washington. Economists projected an April rise of 185,000, according to the median estimate in a Bloomberg News survey.

Investors held a record $412 billion of raw-material assets by the end of March, almost 50 percent more than a year earlier, according to Barclays Capital. Investment linked to commodity indices reached a record-high $352 billion last month, Bank of America Merrill Lynch said. Funds held a net 1.49 million futures and options in 18 commodities by April 26, 57 percent more than a year earlier, within 4.8 percent of a record, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg.

Crude oil rose 1.5 percent to $101.34 a barrel after falling as much as 5.2 percent in New York trading, while Brent crude oil rose 2 percent to $113.01 a barrel in London. Gasoline rose 1.9 percent to $3.1547 a gallon on the New York Mercantile Exchange, and natural gas rose 0.9 percent to $4.30 per million British thermal units.

Central Bank

European Central Bank President Jean-Claude Trichet said policy makers remain “extremely alert” on inflation, and indicated they may take further decisions on interest rates when they have new economic projections in June.

The ECB is monitoring the situation “very closely” after keeping its benchmark interest rate at 1.25 percent yesterday, Trichet told Bloomberg Television in an interview in Helsinki today. The ECB raised rates on April 7, joining China, India, Poland and Sweden in seeking to control inflation.

Copper for delivery in three months rose 0.7 percent to $8,880 a metric ton on the London Metal Exchange. Nickel, zinc, tin and lead also gained. Gold for immediate delivery rose 1.3 percent to $1,494.02 an ounce.

Silver Futures

“The panic that has ensued this week has been proven to be just that: panic,” said Alexander Ridgers, head of commodities at CMD Markets in London, which trades more than $400 million of crude oil a day. “We have seen strong payrolls.”

Silver futures traded on the Comex gained 0.1 percent to $36.29 an ounce. Earlier it fell as much as 8.8 percent after the exchange’s owner, CME Group Ltd., raised margin requirements by 84 percent in less than two weeks.

The rebound in raw materials comes as Glencore International AG sells shares in an initial public offering which may value the Baar, Switzerland-based commodity trader at about $61 billion. Goldman Sachs Group Inc. (GS) in reports on April 11 and April 15 told investors to be “underweight” commodities in the next three to six months. The bank still expects commodities to advance about 10 percent over the next 12 months.

In agricultural markets, cocoa for July delivery gained 1.3 percent to $3,094 a ton on ICE Futures U.S. in New York. Wheat gained 0.6 percent to $7.58 a bushel on the Chicago Board of Trade, while corn fell 0.6 percent to $7.04 a bushel and soybeans rose 0.8 percent to $13.33 a bushel.

-- Editors: Sharon Lindores, John Deane

To contact the reporter on this story; Maria Kolesnikova in London at mkolesnikova@bloomberg.net;

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

5:23

May 6 (Bloomberg) -- David Stroud, chief executive officer of TS Capital, talks about the factors driving the commodities market and investment strategy. Commodities fell for a fifth day, extending the biggest rout since December 2008, as investors cut their holdings in oil, silver and industrial metals amid concern that economic growth will slow. Stroud speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)