Commodity markets win support from China data

Commodity markets were buoyed this week by upbeat Chinese economic data and the weak dollar, but trimmed gains heading into the weekend as many traders took the opportunity to cash in their gains.

Sentiment was boosted by news of a surge in China's trade surplus, which sparked hopes that the world's second-largest economy and biggest energy user was emerging from its slumber.

Official data showed Thursday that the Chinese trade surplus soared 48.1 percent to $231.1 billion (176.4 billion euros) in 2012, though total trade volume grew at a much slower pace in the face of economic weakness at home and abroad.

The country's exports rose 7.9 percent to $2.05 trillion from the year before, while imports increased 4.3 percent to $1.82 trillion, the national customs bureau said.

OIL: Prices spiked to three-month peaks as traders took their cue from the China data and reports of a cut in Saudi Arabian crude production, dealers said.

"Crude oil has rallied sharply ... thanks to China's strong trade data and a weaker US dollar," said analyst Fawad Razaqzada at trading group GFT Global Markets.

Brent oil soared on Thursday to $113.29, the highest level since October 18. New York crude meanwhile hit $94.70, a level last witnessed on September 19. However, the market tailed off on Friday as profit-taking set in.

"Crude oil prices gave back yesterday's gains and slid lower on Friday, due to some profit-taking following a stronger US dollar and mixed global equity markets," said analyst Myrto Sokou at the Sucden Financial Research brokerage.

"It seems that news that Saudi Arabia cut oil production initially supported the oil market but failed to give some further upside momentum."

News of a crude production cut by number-one oil exporter Saudi Arabia supported prices, Brokerage Phillip Futures agreed in a report.

The country slashed oil production by 700,000 barrels per day (bpd) to nine million bpd during the last two months of 2012, the report stated.

Oil was also boosted on Thursday by the European Central Bank's decision not to cut interest rates, which was coupled with a comment from ECB chief Mario Draghi that the group's decision was "unanimous."

Draghi's comments suggested interest-rate policy was off the table for the foreseeable future and helped push the dollar lower. A weaker dollar can make dollar-priced crude cheaper for buyers using rival currencies.

By Friday on the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for delivery in February climbed to $93.25 a barrel from $92.65 a week earlier.

On London's Intercontinental Exchange, Brent North Sea crude for February eased to $110.19 a barrel from $111.22 the previous week.

PRECIOUS METALS: Prices advanced as traders digested the outcome of the European Central Bank's latest monetary policy meeting.

"The yellow precious metal was profiting from a noticeable appreciation of the euro against the US dollar after the ECB left the key interest rates unchanged at 0.75 percent," noted Commerzbank analysts in a research note.

"An even greater role, however, was played by the fact that ECB President Draghi gave stronger emphasis than in his last communique to the abating of the sovereign-debt crisis and to the stabilisation of leading economic indicators."

Gold had soared the previous week to $1,694.81 -- the highest level since December 18 -- as the market was driven by optimism over the US fiscal cliff deal.

By late Friday on the London Bullion Market, gold advanced to $1,657.50 an ounce from $1,648 a week earlier.

Silver rose to $30.67 an ounce from $29.32.

On the London Platinum and Palladium Market, platinum climbed to $1,626 an ounce from $1,557.

Palladium increased to $693.5 an ounce from $689.

BASE METALS: Base or industrial metals enjoyed mixed fortunes.

"It has been a quieter week for base metals... Volatility is low right across financial markets and the mood is upbeat, even in Europe," said BNP Paribas metals analyst Stephen Briggs.

"Base metals have garnered support from dollar weakness and broadly positive economic data, especially China's December trade figures, which have added to the sense that the country is picking up steam."

By late Friday on the London Metal Exchange, copper for delivery in three months sank to $8,093 a tonne from $8,116.50 a week earlier.

Three-month aluminium firmed to $2,110 per tonne from $2,090.

Three-month lead slid to $2,308 a tonne from $2,365.24.

Three-month tin rose to $24,750 a tonne from $23,975.

Three-month nickel decreased to $17,425 a tonne from $17,585.

Three-month zinc slipped to $2,026 a tonne from $2,063.50.

COFFEE: Coffee prices also finished the week on a mixed note.

"In our view, Arabica (prices) will likely underperform in 2013, weighed down by higher surpluses and slowing demand in key markets like Europe," noted INTL FCStone analyst Edward Meir.

By Friday on NYBOT-ICE, Arabica for delivery in March firmed to 149.45 US cents a pound from 145.80 US cents a week earlier.

On LIFFE, Robusta for March delivery retreated to $1,929 a tonne from $1,937 a week earlier.

COCOA: Cocoa futures hit multi-month lows on the back of abundant supplies, but finished the week in positive territory.

"The weaker US dollar helped provide the catalyst for the move higher," noted analysts at trade publication the Public Ledger.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in March rose to £1,435 a tonne from £1,417 a week earlier.

On New York's NYBOT-ICE exchange, cocoa for March increased to $2,253 a tonne from $2,213 a week earlier.

SUGAR: Prices nudged lower on expectations of rising output from Brazil.

"Larger-than-expected production out of Brazil could push supplies even higher," noted Morgan Stanley analysts.

By Friday on LIFFE, the price of a tonne of white sugar for delivery in March eased to $510.50 from $511.60 a week earlier.

On NYBOT-ICE, the price of unrefined sugar for March decreased to 18.88 US cents a pound from 19.00 cents the previous week.

RUBBER: Rubber prices rose as China's trade data sparked hopes of rising demand from the world's largest rubber importer.

The Malaysian Rubber Board's benchmark SMR20 ended the week at 309.80 US cents a kilo, up from 304.90 cents the previous week.

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