Oil leads broad rise in commodities, boosting inflation threat

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Commodities rose nearly across the board Monday as money moved in, betting that the trend in raw materials prices still is up.

Oil led the way, boosted by continuing unrest in Egypt that raised the risk of a shutdown of the Suez Canal -- although for now there appears to be no threat to shipping.

Near-term crude oil futures in New York jumped $2.85, or 3.2%, to close at $92.19 a barrel. That’s a new two-year high, topping the recent high of $91.86 reached Jan. 12.

Meanwhile, prices of industrial metals including copper and aluminum rallied after an index of Chicago manufacturing activity hit a 22-year high in January, suggesting that the U.S. economy started the year with significant momentum.

Wheat, corn and soybean prices also rose, helped by expectations that U.S. grain exports could get a boost as developing nations seek to avoid the food-price-related unrest that helped spark the turmoil in the Middle East, some analysts said.

The Reuters/Jefferies CRB index, which measures prices of 19 major commodities, rose 1.8% to a two-year high of 341.42.

Larry Young, head of commodities trading firm Covenant Trading in Chicago, said expectations of stronger fundamental demand for raw materials also are bringing more speculators into the markets.

‘As you see new highs in prices you see money chasing money,’ he said. ‘The market is saying, ‘Wow -- there really is inflation here.’ ‘

-- Tom Petruno

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