(Bloomberg) -- Commodities prices jumped to new highs as signs of economic recovery from the pandemic raised hopes of renewed energy demand.
The Bloomberg Commodity Index, which tracks price movements for 23 raw materials, rose 0.7% as of 2:29 p.m. in New York after touching the highest level in nearly three years.
Oil futures climbed amid news that the European Union is looking to reopen its borders for travelers who have been fully vaccinated against Covid-19 in another significant step toward a return to normalcy after months of pandemic-induced restrictions. The reopening could further boost a rebound in fuel demand globally.
The world could again be using 100 million barrels a day of crude oil by the end of 2021, which would be a full recovery from the devastating impacts of stay-at-home orders and travel restrictions over the past year, according to Enterprise Products Partners (NYSE:EPD). Demand for hydrocarbons could reach all-time highs as soon as next year, Tony Chovanec, Enterprise’s senior vice president for fundamentals and commodity risk assessment, said during a conference call with investors.
Prices for everything from copper to oil to timber have sky-rocketed as the world’s largest economies recovers from the pandemic, with growing signs of shortages across markets. Manufacturing and building are picking up, cars are filling the streets again and more people are booking airline tickets as they get vaccinated at a time when supplies are curbed by bottlenecks, production curbs and poor weather. China is buying record amounts of corn, and pricier agricultural grains have upended global trade flows.
Hedge funds have increased bullish bets in commodity futures for three consecutive weeks, according to data compiled by Bloomberg. Massive government spending and loose monetary policy have stoked fears of inflation, which has also fueled the bull run. Commodities are typically seen by investors as a hedge against inflation and a weaker dollar.
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