On Friday, Brent crude experienced a relatively calm session. The front-month contract added 0.4 percent and thus erased some previous losses. Still, the price of oil decreased in the fourth straight week and closed below 123 USD per barrel (USD/bbl) level.
China’s PMI reading released today in early trading failed to support the price of oil on more sustained basis. Hence, Brent is currently seen at 122.8 USD per barrel level.
A significantly better than expected result of China’s PMI for March bolstered the price of copper today in early trading. The official index reached 53.1 point and easily beat market expectations (50.5) and three month copper at LME thus surged to 8530 USD per ton (USD/t).
However, HSBC PMI index showed a somewhat different picture. The index also improved, but it remained below the key 50 points level and thus indicated a contraction in economic activity. Hence, we suggest to take the official figure with a pinch of salt as far as the impact on the price of copper is concerned. We maintain our view that the risks for the price are skewed rather to the downside and we think that the price of the red metal might even test 8000 USD per ton level in the second quarter of 2012.
At the time of writing, the price of copper is seen back below 8500 USD per ton level.