NEW YORK: Commodities posted their biggest rise in two months on Wednesday, rebounding from a two-week slump with buyers lured in by lower-than-expected US oil stocks and poor crop weather in the United States and Europe.
After a series of sell-offs this month, crude oil jumped 3 percent in New York. Crude returned to $100 a barrel after a weekly US government report showed a pick-up in refinery use that checked crude inventories and signaled potentially stronger demand.
Grain futures in Chicago soared to their highest in at least two weeks as wheat finished up 7 percent and corn rallied for a fifth straight day on concerns that wet US weather would deter farmers from planting corn while a worsening drought reduced Europe's wheat crop.
Gains in nearly every major commodity market suggested investors believed this month's deep slide -- the biggest sell-off since 2008 -- may have been overdone. Fundamental factors boosted some commodities while others saw buying based on technical levels, brokers said.
"These markets should never had gotten punished in the first place," said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.
"Everything is still there on the inflation side of it and on the fundamental side of it. I think everyone has kind of sobered up from the last two weeks."
But some analysts think the bearish trend may have further to go, pointing to thin volumes in markets with some of the biggest increases such as precious metals and soft commodities such as coffee and cocoa.
"I think people are just holding off right now before they put on a position, to see where the fundamentals will take it," said Bill Raffety, senior analyst at New York's Penson Futures, who watches the cocoa and coffee markets among others.
The 19-commodity Reuters-Jefferies CRB index, a global benchmark for the asset class, settled up 2.5 percent. It was the index's biggest gain since March 17, when it climbed 3 percent.
OIL REBOUNDS
US crude rebounded from two days of declines. Since the start of May, oil prices have fallen in eight out of 13 sessions, losing more than 10 percent.
Investors had been worried US drivers might cut back on travel due to the 40 percent jump in US wholesale gasoline prices between January and April. But US government data showed demand somewhat stronger than many had thought.
The US Energy Information Administration reported crude inventories fell 15,000 barrels last week instead of rising 1 million barrels as analysts polled by Reuters had predicted.
Gasoline inventories edged up by just 119,000 barrels, far short of the forecast for an 800,000 barrel rise.
"These statistics are bullish because they show that the US has consistently lower imports and consistently higher refinery runs," said Jan Stuart, global oil economist at Macquarie Securities in New York.
Refinery activity rose 1.5 percentage points and imports fell by 394,000 barrels per day, according to the EIA report.
Metals markets posted sharp gains. Copper rose almost 3 percent, its biggest one-day advance in 2 months. US gold futures climbed 1 percent.
Wheat hit a one month high and corn rose to a 2-week peak on concerns about the impact of bad weather on crops in the United States and Europe.
Excessive rains and flooding in the United States have delayed corn and spring wheat planting, and more rain has been forecast. Drought ravaged the winter wheat crop, now being harvested, and a severe drought in France has damaged that country's wheat crop.
"There is fresh money coming now, another round of fund buying on weather fears. We broke above technical levels and I think everyone is worried now about prevented plantings," said Justin Kelly, an analyst for Iowa Grain.
July wheat on the Chicago Board of Trade settled up 53 cents at $8.17 per bushel. July corn ended up almost 30 cents at just below $7.50 per bushel.
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