Falling U.S. inventories drove oil to a seven-month high above $71 a barrel on Wednesday, while dollar weakness and sentiment the economy has begun to stabilise also spurred industrial metals higher.
The U.S. currency's pullback helped gold get back above $960 an ounce, with future inflationary concerns also factored into the price.
Copper hit a 8-month high above $5,200 a tonne as the dollar declined across the board. For a graphic highlighting the relationship between the U.S. currency and commodities, click: http://graphics.thomsonreuters.com/069/CMD_MKTS0609.jpg
The American Petroleum Institute (API) on Tuesday reported a deep fall of 6 million barrels in U.S. crude stocks in the week ended June 5, surpassing analysts' expectations of a 400,000-barrel draw.
Also the U.S. government's Energy Information Administration (EIA) raised its 2009 demand forecast for the first time since September..
"The crude stock draw and the EIA demand revision has bolstered hopes demand is starting to improve," VTB Capital analyst Andrey Kryuchenkov said.
Oil has more than doubled since a trough of $32.40 hit in December and copper has gained around 70 percent from its lows.
Commodity market investors have seized on a sustained stock market rally as an indication of economic recovery and greater appetite for risk after leading economies deployed multiple measures to stem the financial crisis.
Although the crude inventory figures were bullish for now, some analysts argued the overall price surge could be premature and that crude was behaving in a similar fashion to last year when record levels were followed by a crash.
"The price moves are in anticipation of market movements in the future," said Commerzbank analyst Eugen Weinberg said.
"This is not such a good exercise as the prices are not reflecting fundamentals for now or the foreseeable future. I really did not expect this over-speculation to come to the market so soon," he added.
U.S. light crude for July delivery rose 1.32 percent to $71.33 a barrel by 1149 GMT having earlier hit a seven-month high of $71.65. Prices are still well below a record high of above $147 reached last July.
The market could rise further on Wednesday if the EIA confirms the API's fall in crude inventories, in its own data to be released at 1430 GMT.
BASE METAL SURGE
London Metal Exchange three-month LME copper rose half a percent to $5,220 a tonne, just off an eight-month high of $5,264 touched earlier.
Aluminium for three-month delivery on the London Metal Exchange rose to $1,684 a tonne from $1,664 by 1149 GMT. It had hit a session high of $1,701, its highest since Dec. 2.
Stocks of aluminium in LME warehouses fell 3,225 tonnes, but stayed near record highs above 4.2 million tonnes.
"People are allowing themselves to get a bit more bullish," said Standard Bank analyst Leon Westgate.
"It could be a slow process rather than a rapid one, but there will be a recovery rather than further weakness."
U.S. soybean futures held near Tuesday's nine-month high, with grains steady ahead of a global demand and supply outlook report to be issued by the USDA. Chicago Board of Trade July soybeans eased 0.2 percent to $12.41-1/2 after rising 11 cents on Tuesday.
