Oil and iron break commodity slump

COMMODITIES staged a rally yesterday as oil rose above $40-abarrel and iron ore saw the biggest gains on record.

Brent crude, which has been hit by months of global over-production, rose as high as $40.22 per barrel as output showed increasing signs of slowing down.

US production has fallen for the sixth week running, as shale producers cut back on drilling, while Russia’s oil minister Alexander Novak said his country would this month progress talks with Opec rivals on a production cut.

It follows an agreement that Russia made in February with Saudi Arabia, Qatar and Venezuela to freeze production levels so long as other countries join them.

United Arab Emirates energy minister Suhail Al Mazrouei welcomed the moves towards stability yesterday and said: ‘It’s logical for everyone to freeze their production. It doesn’t make sense for anyone to increase production at the current prices.’

Iron ore also saw a boost, with prices surging by a fifth to $63.74 per dry metric ton after China said it would be stocking up for the summer construction season.

And so far this year other commodities have seen increases, with the price of copper rising by 6.9pc and aluminium up 5.3pc.

Yesterday’s rally brought to an end a 20-month rout in oil prices, which fell to a 13-year low of near $27 per barrel. Iron ore was at its lowest price ever in December, falling to $39.40 per ton.

Molybdenum, which is used in some alloy steels, was the sharpest falling commodity for 2015, with prices dropping by 49pc.

The rising oil price will be a comforting sign for Shell boss Ben van Beurden, who had said his company’s £36bn merger with BG Group needed a price of $60-a-barrel to make the deal worthwhile.