Commodity prices hit new highs as signs of an economic recovery raised hopes of renewed energy demand and a weaker dollar fueled investor appetite for precious metals.
The Bloomberg Commodity Spot Index, which tracks price movements for 23 commodities, rose 0.7% on Monday. The index is at levels not seen since 2012.
Oil, the group’s most weighted commodity, surged after the European Unionhas proposed easing travel restrictions, a move that could further stimulate a rebound in global fuel demand. Meanwhile, the greenback retreated, stimulating the purchase of dollar-denominated commodities, including silver and gold.
The world could use 100 million barrels a day of crude oil again by the end of 2021, which would be a full recovery from the devastating effects of home orders and travel restrictions over the past year, according toCorporate product partners. Demand for hydrocarbons could reach record levels as early as next year, said Tony Chovanec, Enterprise’s senior vice president for fundamentals and commodity risk assessment, in a conference call with investors. investors.
Prices of everything from copper to oil to timber have skyrocketed as the world’s largest economies recover from the pandemic, with increasing signs of market shortages. Manufacturing and construction resume, cars fill the streets again, and more people are booking airline tickets to get vaccinated at a time when supplies are limited by bottlenecks, production restrictions and adverse weather conditions. China is buying record amounts of corn, and more expensive agricultural grains have disrupted global trade flows.
Hedge funds have increased bullish bets on commodity futures for three consecutive weeks, according to data compiled by Bloomberg. Massive government spending and loose monetary policy fueled inflation fears, which also fueled the bull run. Commodities are generally viewed by investors as a hedge against inflation and a weaker dollar.
– With the help of Sheela Tobben
(Updates with the Bloomberg Commodity Spot Index in the second paragraph.)