Oil leads rise on Greek relief

Commodities rose on Monday on relief after pro-bailout parties won Greece’s election, averting the financial turmoil expected if the poll had gone the other way, but most came off session highs on concern the Eurozone crisis was far from ended. Oil, copper, wheat and rubber jumped when markets opened as political parties supporting debt-stricken Greece’s bailout won Sunday’s election, fuelling appetite for riskier assets. A victory for radical leftists would have led to a Greek exit from the Eurozone, plunging the single currency bloc into chaos. Gold fell, snapping a six-day rally, as the Greek election outcome meant less interest from investors looking for a safe haven. Greece’s centre-right New Democracy party will try to form a coalition on Monday with other parties backing the international bailout, but analysts cautioned the optimism and the price gains may be short-lived.“I’m not sure the rally is going to last long. The problems are still there, you still have huge fiscal issues and it’s not just Greece, it’s Spain and others,” said Dominic Schnider, executive director for wealth management research at UBS. Most commodity prices have come off the session’s highs and gold trimmed its losses, reflecting investor caution on what awaits the Eurozone after the Greek poll, given high borrowing costs in Spain and Italy and the continued threat to the global economy from the region’s debt crisis. Brent crude was up $1.05 at $98.66 a barrel by 0652 GMT, well off a one-week high of $99.50 touched earlier. US oil gained 71 cents to $84.74, after hitting a one-week top of $85.60. “We should see the concerns over Italy and Spain restricting any further upside moves on crude,” said Jim Ritterbusch, president of trading consultancy Ritterbusch & Associates in Galena, Illinois. Oil players are also watching the start of talks in Moscow between world powers and major oil producer Iran. The United States, Russia, China, France, Britain and Germany are hoping to win concessions from Tehran and forestall a potential new war in the Middle East that could disrupt oil supplies. Gold loses shine Spot gold dropped half a per cent to $1,619.60 (Dh5,948.79) an ounce, after falling more than 1 per cent earlier as the Greek outcome revived appetite for riskier assets. Bullion, which often tracks movements in the euro, ignored steep gains in the single currency, but analysts are convinced gold’s losses should be curbed, given the shaky global economy. “The Greek situation looks okay for now, but I think there’s not much reason to sell,” said Yuichi Ikemizu, head of commodity trading for Japan at Standard Bank. This week’s US Federal Reserve meeting, from which investors will be seeking more clues to the chances of a third round of quantitative easing after a recent spate of weak US economic data, will be key for the gold market. Gold is up around 4 per cent so far this month, mainly after rising by around that much on June 1 — its biggest rally in more than three years — when dismal US jobs data fuelled talk of more US monetary easing. Copper rose 0.8 per cent to $7,567 a tonne, coming off the session’s peak of $7,615, its loftiest since May 30. Trimming copper’s gain was data showing average home prices in China’s 70 major cities fell for a third straight month on an annual basis since Beijing imposed strict curbs on property speculation more than two years ago. China is the world’s top copper consumer, accounting for 40 per cent of global demand. Grains mostly clung to the day’s gains, with Chicago July wheat up 1.4 per cent at $6.17-3/4 a bushel after rising as high as $6.19-1/2. December corn gained 2 per cent to $5.16, near the session high of $5.16-1/2. Tokyo rubber closed up 3.1 per cent at 255.5 yen per kg, after hitting a high of 257.4 yen, a level not seen since June 1.from gulfnews.com