Commodities Prices Jump Led by Surge in Crude Oil

It was a bullish day for commodities on Wednesday led by a surge in crude oil prices. Copper and Aluminum also rose sharply with the latter reaching its highest level since 2011. Supply disruptions were the theme with traders largely ignoring the slightly better U.S. Dollar.

Gold futures were only slightly higher, but other metals posted solid gains including silver which gained 2.61% and Platinum which jumped 0.95%.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil rallied to their highest level since late 2014 on Wednesday after a U.S. government report showed U.S. crude stockpiles declined last week and as traders continued to price in the possibility of supply disruptions in several key oil-producing nations.

On Wednesday, the U.S. Energy Information Administration reported U.S. commercial crude inventories dropped by 1.1 million barrels in the week-ending April 13. Stockpiles of gasoline also dropped by 3 million barrels, while distillate fuels including diesel declined by 3.1 million barrels.

A surprised jump in gasoline demand also helped drive prices higher.

Gold

Gold futures hit a one-week high on Wednesday, helped by technical buying and some safe-haven demand despite a stronger U.S. Dollar and increased demand for higher risk assets.

Gold traded lower early in the session but recovered enough to surge through a key technical area at $1352.50. The current price action suggests the market may be building a new higher bottom at $1335.50 which will be strong sign that buyers are still coming in on the dips.

Additionally, palladium prices rose on fears of Russian supply disruptions after the recent U.S. sanctions on shareholders of Nornickel, the world’s largest producer.

Copper

Copper prices surged 2.64% on Wednesday, driven by increased demand for commodities, specifically crude oil and industrial metals. The strong close put copper in a position to take out its March 14 main top at $3.2115.

Natural Gas

Natural gas rallied early in the session but succumbed to heavy hedging pressure to finish lower for the session. Speculators initially drove the market higher ahead of Thursday’s U.S. Energy Information Administration’s weekly storage report.

There were no significant revisions to the fundamental landscape so most of the price action was likely position-squaring. The move may have been designed to take out stops over $2.810 in order to allow hedgers to re-enter positions at more favorable price levels.