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Commodities: WTI jumps as traders price-in geopolitical premium after Bolton appointment

Brent crude oil futures pushed towards a fresh 52-week high on Friday alongside a fall in the Greenback back towards its own 52-week lows.
May 2018 ICE Brent futures climbed 2.23% to $70.45 a barrel, hitting an intra-day and 52-week high of $70.75, helped by the White House's decision to replace national security adviser HR McMaster with a former US ambassador to the UN who was a well-known policy hawk, John Bolton.

According to some market commentary, that fuelled speculation that sanctions against Tehran might be reimposed.

"Oil caught a bid on geopolitical risk after Trump tapped two Iran hawks, Mike Pompeo and John Bolton, as the new Secretary of State and National Security Advisor respectively, potentially destabilizing the area and disrupting supply. Furthermore, a surprise draw in crude inventories [on Wednesday] also added to the return of optimism in the crude market, and likely forced the recent shorts to cover their positions," said analysts at TD Securities.

In parallel, West Texas Intermediate for prompt month delivery was ahead by 2.46% to $65.88 a barrel and up by 5.7% for the week, its best five-day winning stretch since July.

On a separate note, analysts at BoA-Merrill said Brent crude futures would likely be capped at $80 a barrel in the near-term.

"In turn, economies with the highest price elasticity of oil demand are also heavily exposed to a global trade and interest rate shock. Thus, while we reiterate our projected path to lower OECD oil inventories by 4Q18, we still see Brent prices capped at $80/bbl near-term," the BoA commodities team led by Francisco Blanch said.

From a bird's eye view, by the close of trading the US dollar index was lower by 0.47% to 89.44, alongside a 0.39% rise in the Bloomberg commodity index.

As the Greenback declined in value, traders jumped back into gold, helping to drive gains in June 2018 gold on COMEX of 1.69% to $1,355.70/oz..

"Major stock markets struggled to recover from the Trump administration tough stance on trade tariffs announced yesterday, on top of the tech sell off seen earlier in the week. Hence gold continued to move higher as "safe haven" demand increased, clearing 1340 resistance up to 1350 area.

"Base metals, which saw volatile conditions yesterday, were under pressure from the open in Asia during which time the lows of the day were established before a broad, but tentative price recovery took shape through the Western trading day. Despite this, the 5pm LME closes were all down bar zinc which clawed its way back above 3200," said traders at Sucden Financial.

Three-month LME copper ended the day out from $6,660 per metric tonne, versus a Thursday close of $6,719 per tonne.

Over in soft commodities, ICE-traded cocoa futures were continuing to roar back, rising 3.16% to $2,615 per metric tonne - their best level since late 2016.

May 2018 CBoT wheat meanwhile added 0.99% to finish at $4.6025 a bushel.

June 2018 live cattle futures were 2.03% weaker by the end of trading to $1.0620 a pound.