LONDON, July 2, (AFP): Oil approached the end of the week down slightly on a midweek rally but still well ahead of its lowest point after Britain’s shock vote to leave the European Union.
North Sea Brent crude recovered from a Monday low of $47.16 to hit $49.68 by Friday.
And West Texas Intermediate flirted with valuations as low as $46.33 during the week before reaching $48.15.
Analysts pointed to several factors for oil’s failure to recoup the pre-Brexit peak of just over $50.
Comments from Bank of England governor Mark Carney that pointed at a rate cut this summer took the pound and euro lower, striking a blow at demand for dollar-denominated oil.
And supplies are set to remain ample after clouds hovering over production in Nigeria and Norway cleared.
With Saudi Arabia continuing to fight a battle for market share by cutting prices, “odds are on further weakness next week,” according to analysts at PVM.
Industrial metals shrugged off losses they had taken through the week in the wake of the British referendum.
Copper reached a two-month high of $4,856 per tonne on Thursday, while aluminium reached its highest point since the start of May at $1,664.
Lead and nickel also flirted with three-month highs in Friday trading, helped by expectations that Asian central banks will do more to help economic growth, especially in China.
“Market participants clearly expect the Chinese authorities to take monetary policy measures in the next few weeks in a bid to minimise the negative impacts of the ‘Brexit’ on Asia’s largest economy,” said analysts at Commerzbank.
China is the largest consumer of industrial metals worldwide — with the UK accounting for less than 1 percent of global consumption of most base metals.
“Any economic slowdown the UK may suffer will have a negligible impact on the supply-demand balances,” agreed analysts at UniCredit.
“Ultimately, the metals might end up being more affected by what Brexit has done to the dollar.”
Gold remained strong over the week, rallying from a slight dip on Monday — when holders cashed in on the precious metal’s spike after the British results emerged on June 24 — to reach $1,341 per ounce Friday.
Commerzbank “do not believe that gold will decline significantly,” as investors will continue to prize it as a haven while uncertainty over Britain’s future political direction and relationship with the EU continues.
Among food commodities, coffee and sugar both saw prices bubble up as supply fears hit trading.
Warnings of a lower-than-expected coffee harvest in Brazil saw prices hit a three-week high of $1,740 per tonne for robusta and the highest point since April for arabica at 147.9 cents per pound.
Heavy rains in Brazil also saw white sugar prices jump to 36 percent higher than they had been at the start of the second quarter at $570.30 per tonne.
And with the pound suffering steep losses after the Brexit vote, cocoa priced in sterling became a more tempting treat, pushing prices as high as to 2,412 pounds ($3,207) per tonne in London before they stabilised slightly lower on Friday.
In New York, by contrast, a tonne of cocoa was trading at $2,979 — down from $3,046 last Friday.