Commodities Hit New High on Positive Oil Demand Outlook

The recent economic recovery has raised expectations on renewed energy demand, this prompted commodities prices to make new highs. The Bloomberg Commodity Spot Index is at the highest level since 2012. The index tracks price movements for 23 raw materials.

The retreat in the greenback has spurred buying of precious metals including gold and silver. With spot gold current trading near US$1791 an ounce and silver near US$26.8. Global oil prices rose on optimism over European Union proposed easing travel restrictions. According to ZERO Markets’ Metatrader, 4 platform Brent crude is currently trading near 67.5 a barrel. 

According to Enterprise Products Partners, a full recovery from the impacts of travel restrictions over the past year could again see the world consuming 100 million barrels of crude oil a day by the end of 2021.

Prices for all commodities from oil to copper to timber have sky-rocketed as the world’s largest economies recover from the pandemic. Supply shortages in certain commodities are becoming prominent as streets are again filled with cars and air travel returns as more people get vaccinated. 

According to data compiled by Bloomberg, hedge funds have increased bullish bets in commodity futures for three consecutive weeks. The bull run in commodities is further fueled by the higher inflation expectations and a weaker dollar on the back of massive government spending and loose monetary policy.

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