Commodities prices fell across the board on Wednesday and oil was no exception. The regular weekly report of U.S. Department of Energy showed that crude stockpiles rose more than expected last week. Hence, WTI lost about 1.5 percent whereas Brent weakened by 1 percent. The report also unveiled that U.S. gasoline retail prices exceeded 4 USD a gallon level, i.e. gasoline is as expensive (nominally) as it was on the eve of global financial crisis in summer 2008.
Metals
Base metals complex posted significant losses yesterday. Nickel lost more than 5 percent, copper price dropped by almost 2.5
percent.
Moreover, copper is extending losses today in the morning. The metal is currently trading even below 9000 USD per ton (USD/t), i.e. at levels last seen on 15th March 2011. We expect that the correction might continue, average prices in Q2/2011 might reach 9000 USD/t mainly due to worries related to continuing monetary tightening in China, world’s top copper consumer. Technically, the next target is seen at 8977 USD/t (see the chart).
Silver sell-off continues. The metal is trading at 38.7 USD per troy ounce (USD/toz) level, i.e. at the lowest price since early April 2011 and more than 20 percent lower compared to an all-time high reached in the end of April. CME Group again raised silver futures margins. Moreover, the company plans to increase them further by about 14 percent as of next Monday. Meanwhile, gold dropped below 1520 USD/toz.
Today, markets would probably watch closely the press conference following the ECB monetary policy meeting. We bet that Mr. Trichet could “announce” a rate hike as early as for June. Weakening U.S. dollar might help cap precious metals’ losses.
Copper - Chart
Legend:
COPPER 3M 24H (9058.00): Drop from April 11 high now trying to extend below key Support area of 9234.85 (neckline Head And Shoulders Tops: see graph: 1st target would be 8688.70).
1st Resistance area at 9200.85/ 9207.18 (daily modified Alpha Beta trend top/ daily envelope top), with next levels at 9241.00 (daily Short Term Moving Average
), ahead of 9379.23 (daily Medium Term Moving Average
).
Must sustain back above 9508.59 (weekly Short Term Moving Average + 50 Day Moving Average
) to signal end of alert for Copper.
If unable to cap, next levels at 9710.00 (April 21 high), ahead of 9801.97 (monthly envelope top).
9944.75/ 9990.00 = April 11 high/ March 04 high: tough on 1st attempts.
1st Support at 9044.00 (today’s + current reaction low off 9944.75?), with next levels at 9039.00 (daily Bollinger bottom), ahead of 9001.75 (daily modified Alpha Beta trend bottom) and 8977.88 (daily envelope bottom), where pause favored.
If unable to hold, next levels at 8944.50/ 8940.00 (current reaction low off 10190.00/ previous high), ahead of 8888.49 (monthly envelope bottom + daily Starc bottom) and 8787.14 (61.8% Nov 17 low to 10190.00): tough on 1st attempts.