Commodity markets experienced rather calm trading yesterday. After a more than 4 percent plunge on Wednesday, Brent posted little gain on Thursday. China’s planning agency said today that the country will put diesel exports on hold. China’s officials said earlier that the country might experience the worst energy shortages since 2004 during the summer. Such events will likely lead to higher utilization of diesel-powered generators.
Regarding the latest IEA’s monthly Oil Market Report, the agency revised its demand growth forecast on the downside due to the impact of high prices of oil on economic growth in advanced economies.
Today, an unexpectedly strong result of Germany’s GDP for the Q1/2011 pushes the EUR/USD currency pair above 1.43 EUR/USD and hence bolsters commodities. Brent is currently trading above 114 USD per barrel.
Copper posted modest gains on Thursday despite the fact that China’s central bank further increased required reserves ratio to a record high of 21 percent. The metal (3M LME contract) gained about 0.4 percent. KME group said yesterday that the demand for copper from Germany in the first quarter was particularly strong (which is in line with today’s figures on GDP).
Nevertheless, China is the source of key information as far as copper market is concerned. We expect that continuing fight against inflation should curb the price of the red metal.
Today, precious metals should focus especially on the data regarding U.S. inflation for April. Of course, investors would eagerly watch prospective signs of increasing price pressures in the world’s largest economy. If the inflation surprises on the upside, precious metals might post modest gains.