Commodities fell in quiet trading Tuesday but were still on track to close out December with outsize gains, highlighting how a brighter view of the world economy is supporting riskier investments entering 2020.
U.S. crude-oil futures slid 1.4% to $60.81 a barrel Tuesday but were still up more than 10% for the month and about 34% for the year, heading for their largest annual gain since 2016. Brent crude, the global gauge of oil prices, dropped 1.3% to $65.83 on the final trading day of the year but has also rebounded after tumbling in the last few months of 2018.
Limited production by the Organization of the Petroleum Exporting Countries and allies including Russia and hopes that a U.S.-China trade deal will support fuel consumption have helped oil stabilize late in the year.
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Optimism about demand for commodities has also supported copper, a metal critical to manufacturing and construction, late in the year. Most-active futures fell 1% to $2.8060 a pound Tuesday but are still up roughly 5.5% in December after trading sideways for much of the year.
Copper’s rally in particular highlights hopes that the Chinese economy will pick up steam following an initial U.S.-China trade pact. China accounts for roughly half of global consumption of the industrial metal.
Figures Tuesday showed that easing trade tensions lifted demand for Chinese goods and boosted factory production in December. The official manufacturing purchasing managers index remained unchanged at 50.2 in December, indicating an expansion of activity for the second straight month after showing contractions for six months.
President Trump also said on Twitter that he will sign the “phase one” trade accord with China on Jan. 15 at the White House before traveling to Beijing for the next phase of talks.
Hedge funds and other speculative investors are anticipating more stability for commodities ahead. They pushed net bets on higher U.S. crude prices to their highest level in nearly six months during the week ended Dec. 24, Commodity Futures Trading Commission data show.
Net bullish bets on copper by speculators that week stood at their highest point since mid-March.
Analysts have cautioned against reading too much into market moves the last few weeks of the year because of thinner holiday trading. Many are awaiting more data points to gauge the trajectory of economic growth early next year, with figures on December hiring and activity in the services sector on tap next week.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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