The price of assorted commodities, including base and precious metals and crude oil, spiked upward on Wednesday, reacting partly to ongoing and unpredictable political protests in Egypt.
Crude oil broke past the important $100 per barrel price threshold for the first time since September 2012, rising about 1.5 percent during the trading day. The $101-per-barrel mark reached Wednesday is also the highest price since May 2012.
Although Egypt doesn’t produce much oil, the country controls the Suez canal and pipeline, which transports about 4 million barrels per day. If the oil supply chain is disrupted there, it’s hard to overstate what the impact on global oil prices could be.
“It’s anyone’s guess as to how high crude oil can go when crisis erupts in the Middle East,” Lido Isle Investors told CNN Money. A further rise in prices over the coming days would be unsurprising, they said.
Oil costing $100 per barrel could act as a typical minimum floor for the coming weeks but is unlikely to stick to that level by the end of the year, Capital Economics said in a research note.
“Events in the Middle East, as ever, seem to be the wildcard,” Capital Economics analyst Julian Jessop wrote.
He added that unrest in Egypt could fade as quickly as it has flared and that, even if oil supplies are eventually threatened, the U.S. and allies can still lean on vast strategic oil reserves.
Meanwhile, gold also bounced back, reaching $1,250 per ounce in trading on Wednesday, staying just shy of a 1 percent rebound. The recent modest rebound stems from investors realizing that gold prices below $1,200 per ounce are overdue for some positive correction, according to a research note from Swiss bank UBS AG (NYSE:UBS).
Still, a weak outlook for gold and strong continued interest in selling the precious metal bode badly for gold’s longer-term prospects, according to the note.
In copper trading, prices rose to their highest in two weeks on Wednesday, in trades on the London Metal Exchange, Reuters reports. Prices reached $6,999 per tonne at one point.
Copper supply has diminished, and Chinese importers are paying a premium, contributing to the price spike. Palladium and platinum prices have done well in the past two weeks, also, according to UBS researchers.