Commodities Markets Summary

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September 6th, 2012

Oil prices rose modestly, lifted by a drop in US crude oil supplies and the European Central Bank's (ECB) new bond-buying measures to backstop financially stressed Eurozone nations.

New York's main contract, light sweet crude for October, climbed 17 US cents to close at $US95.53 a barrel.

Brent North Sea crude for delivery in October rose 40 US cents to $US113.49 a barrel in London trade.

The US Department of Energy's petroleum report showed crude oil supplies fell last week, "which always puts some upward pressure on price," said James Williams at WTRG Economics.

US crude inventories fell by 7.4 million barrels in the week ended August 31, to 357.1 million barrels, the DoE said.

Supplies were affected by Hurricane Isaac, which churned through the Gulf of Mexico last week.

ECB president Mario Draghi said the bank would buy sovereign bonds, effectively lowering crisis-wracked countries' borrowing costs, if they first applied for a bailout and accepted reform targets.

PRECIOUS METALS

Gold has climbed to the highest price in almost six months after the European Central Bank (ECB) outlined a plan to buy bonds in the open market in an effort to support the euro zone's rattled debt markets.

The most actively traded gold contract, for December delivery, on Thursday rose $US11.60, or 0.7 per cent, to settle at $US1,705.60 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement price since March 9.

Gold prices have advanced since mid-August, as expectations for monetary easing through much of the world increased investor demand for the precious metal. Many investors expect the Federal Reserve to ease monetary policy at its meeting next week, on September 12-13.

Between August 14 and Thursday's settlement, benchmark gold futures are up 6.6 per cent.

BASE METALS

Base metals closed mixed on the London Metal Exchange (LME), mostly little changed as investors found limited direction from statements from the European Central Bank (ECB) and sights are now set on a key US employment data reading due Friday.

At 1615 GMT on Thursday (0215 Friday AEST), LME three-month copper was 0.5 per cent lower on Wednesday's settlement at $US7,700 a metric ton.

The base metal prices reaction to the ECB announcement was somewhat muted with many expectations already priced in after some details of Draghi's measures were reported on Wednesday.