January 28, 2014 / 9:47 PM / in 4 years

COMMODITIES-U.S. crude futures rally on supply worries; natgas rebounds

* U.S. crude futures rally $2/bbl on supply worries
    * Natgas up on brutal cold forecast over United States
    * Gold down on speculation over Fed stimulus tapering
    * Coming up: Fed Open Market Committee policy statement Weds

    By Frank Tang
    NEW YORK, Jan 28 (Reuters) - U.S. oil futures rose nearly $2
a barrel on Tuesday on worries over dwindling supplies,
narrowing their discount to European Brent, while natural gas
rebounded as forecasts for colder temperatures in the coming
days in most of the United States.
    Copper hit a seven-week low as buying interest faded ahead
of the Chinese New Year and as a stronger dollar weighed, while
U.S. wheat prices rose on better demand expectations and the
severe cold U.S. weather.
    Gains in energy products lifted the commodity baskets as a
whole. The Thomson Reuters/Core Commodity Index, a
benchmark for global commodities made up of 19 components,
closed up 2.4688, or 0.9 percent, at 282.1796.
    U.S. oil drew support from market perception that the
gradual startup of TransCanada Corp's Keystone pipeline
would move supplies to the Gulf Coast from oil hub Cushing,
Oklahoma, where the U.S. crude oil contract is priced. 
    A lack of pipelines in the region has kept U.S. prices
depressed relative to Brent oil for the past three years.
    "The Brent/WTI spread is contracting a bit more, and that
always helps crude prices," said Tariq Zahir, managing member of
commodity trading advisor Tyche Capital Advisors in New York. 
    U.S. light crude oil touched a high of $97.66, up
$1.94, and settled $1.69 higher at $97.41, its highest
settlement since Dec. 31.
    Brent crude touched a high of $107.79 a barrel, up
$1.10, and then settled up 72 cents at $107.41 a barrel. 
    U.S. natural gas closed up almost 4 percent after private
forecaster MDA Weather Services revised its six-to-10-day
forecast to show colder-than-average temperatures for all of the
country except Florida.
    In precious metals, gold fell for a second day as global
equities rebounded from a one-month low and emerging markets
stabilized after three days of intense selling. 
    The precious metal was under pressure on speculation that
the Federal Reserve will make a $10 billion cut to the U.S.
central bank's $75 billion monthly bond-buying stimulus. Fed
tapering worries were a major factor in gold's 28 percent price
crash last year. 
    The Fed is likely to leave intact their delicately worded
easy-money message in its closely watched policy statement when
it concludes its two-day meeting on Wednesday.
    Copper prices fell as recent growth worries over emerging
markets stirred demand fears for industrial metals.
    In agricultural commodities, U.S. wheat and corn 
both gained as top global buyer Egypt purchased a cargo from the
United States for the second time this month and bitter cold
threatened to damage the crop.  

 (Editing by Andrew Hay and David Gregorio)
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