On Wednesday, Brent crude posted yet another significant loss and in the late evening was seen as low as at 92 USD per barrel (USD/bbl) level, i.e. the lowest price since the end of 2010. Moreover, the EIA report on US oil inventories showed rising stocks of both crude (unexpected) and products (higher than expected). Despite the reversal of Seaway pipeline in mid May, stocks of crude in Cushing increased and again therefore hit an all-time high of 47.755 million barrels. Nevertheless, the spread between Brent and WTI tightened and reached the lowest level in five months.
Today in early trading, Brent extends yesterday’s losses after the flash PMI estimates for June disappointed in both China and the euro zone. At the time of writing, the front-month contract on Brent (July expiration) is trading at 91.66 USD/bbl.
Base Metals
Base metals prices fell across the board on Wednesday. Moreover, LME aluminium is set to post losses in ninth consecutive session as China’s flash PMI for June came out below expectations. Despite the fact that the low price of the metal is eating into profits of several producers across the world, the price continues to fall further below 2000 USD per ton level as, according to International Aluminium Institute, China’s AL output (hit an all-time high in May) outweighs the falling production outside of China.
Precious Metals
The US Federal Reserve decided yesterday to extend its Operation Twist until the end of this year to support the slowing US economic recovery, but refrained from a more aggressive plan to ease monetary policy. Therefore, the outcome of the FOMC meeting slightly disappointed the markets and thus undermined the price of gold (bets on QE were apparent). Although the Fed kept the door wide open for more accommodation, the price of the yellow metal falls back below 1600 USD per troy ounce.