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Commodities Rally as Traders Hope for End to Coronavirus

February 6, 2020 at 10:32 by Vladimir Vyun

Crude oil and copper rallied today amid risk appetite on markets. The Wuhan coronavirus continued to spread, but it looks like investors hope that the epidemic can be stopped before it hurts the global economy significantly. There were unconfirmed rumors about a breakthrough in curing the disease. Crude had an additional supportive factor in the form of OPEC+ talks about more production cuts to buoy prices.

Yesterday, the Energy Information Administration reported that US crude oil inventories grew by 3.4 million barrels to 435.0 million barrels last week. It was a bigger increase than a 2.9 million gain predicted by experts. Meanwhile, total motor gasoline inventories and distillate fuel inventories decreased.

Futures for delivery of WTI crude oil in March climbed by $0.51 (1.00%) to $51.26 per barrel as of 10:20 GMT on NYMEX today. Brent crude for delivery in April gained $0.16 (0.29%) to $55.44 per barrel on ICE. March copper rose by $0.01 (0.39%) to $2.5845 per pound on COMEX.

Surprisingly, gold and silver also rose on Thursday. Usually, safe commodities (like precious metals) move inversely to riskier commodities (like crude oil and industrial metals). But that was not the case today. The possible reasons for that were the fact that China is a big consumer of gold (meaning the the positive news about the coronavirus treatment could be helpful to the metal to some degree) and the dovish outlook for monetary policy of the Federal Reserve.

Contract for delivery of bullion in April advanced by $4.5 (0.29%) to $1,567.3 per troy ounce on COMEX today. March silver climbed by $0.16 (0.9%) to $17.76 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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