U.S. crude oil futures rose more than 2 per cent Thursday, to the highest settlement in 2-1/2 years, and the global economic recovery also sent cotton, silver and gasoline soaring in the first three months of 2011.
Benchmark West Texas Intermediate crude rose $2.45, more than 2 per cent, to settle at $106.72 a barrel (U.S.) on the New York Mercantile Exchange. At one point it hit $106.83, the highest it's been since September, 2008. In London, Brent crude rose $2.25 to settle at $117.20 per barrel.
The Reuters-Jefferies CRB index of 19 mostly U.S.-traded commodities rallied 8 per cent for the quarter and was up 1.6 per cent for the day at a level last seen Sept. 2008.
Threats to oil supplies posed by the conflict in Libya and unrest in the Middle East put upward pressure on prices, as did positive U.S. economic data. Japan's nuclear crisis and well as rising interest rates in top raw materials user China weighed on sentiment.
Worries mounted about Syria, where more than 60 people have been killed in protests. President Bashar al-Assad defied calls to lift a decades-old emergency law, despite hundreds marching in Latakia chanting "freedom" on Wednesday.
U.S. DATA CHEER
Earlier, oil prices firmed along with other commodities, like metals and grains, when a U.S. government report showed jobless claims fell last week. The report arrived a day before the closely watched March nonfarm payrolls report is due.
Adding support, the Institute for Supply Management-Chicago reported its employment index in March hit the highest level since December 1983, though its overall business barometer dipped in February.
Investors are preparing for Friday's monthly U.S. employment report and expectations point to a sixth consecutive increase in the number of workers on non-farm payrolls, the longest stretch of gains since late 2006.
The data gave a boost to copper , which closed slightly higher but ended the first quarter of 2011 with a 2.4 per cent loss, its first quarterly decline since the second quarter of 2010. Concerns about softer Chinese demand and rising warehouse stocks weighed on sentiment.
Among precious metals, global economic growth combined with geopolitical risk could keep boosting silver , which gained 22 per cent in the first quarter, its ninth consecutive quarterly increase that took the price to 31-year highs above $37.00 an ounce.
With the price of gold near record highs, silver has been a major beneficiary of demand from investors seeking cheaper safe-haven alternatives.
"Silver's seen a perfect storm with a combination of a positive economic outlook to boost its industrial demand, together with inflation risks, geopolitical unrest and natural disasters. Little wonder it jumped so much," said a Singapore-based bullion trader.
Spot silver was up 0.9 per cent at $37.78.
Gold also rose, posting its 10th consecutive quarterly increase, although the 0.9 per cent gain was its slowest since late 2008.
Gold touched a record $1,447.40 last week. It has since retreated to $1,428,90, but the expectation among analysts is for the price to remain well supported by the prospect of safe-haven demand stemming from the violence in the Middle East and concern over the euro zone's debt problems.
"Until we see a substantial decrease in liquidity or a rise in real interest rates, you would look for an upward trend, and all these other factors like the euro zone debt and Middle East, North Africa issues are also a short-term support," said Standard Bank analyst Walter de Wet.
Grains surged, with corn rallying 4.5 per cent as strong demand whittled down stocks even as farmers geared up to plant the second-largest area since 1944.
Soybeans soared to a seven-week high after the U.S. Agriculture Department reported lower-than-anticipated stocks and spring seedings that were below expectations.
Wheat rose 5 per cent, following soaring corn and soybeans despite a bearish stocks estimate and a larger-than-expected jump in the USDA's spring wheat seedings forecast.
"Even though we've seen food inflation and everything else that has taken place, the demand has not backed away. Even at these lofty prices, we're still seeing strong demand in the U.S. and in world markets for agricultural commodities," said Shawn McCambridge, analyst with Prudential Bache Commodities.
The potential threat to supply pushed cotton futures up by about 35 per cent in the first three months of the year,in their eighth consecutive quarterly gain, after having nearly doubled in price last year.
A U.S. government crop report is expected to show sowings at a 5-year high, which could cool the market, but with prices close to record highs, this offered consumers little relief.
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