On Friday, commodities markets experienced the strongest rally (in terms of gains of Reuters Jefferies CRB index) since the end of December 2008. The front-month contract on Brent gained more than 7 percent and in intraday trading was seen as high as at 98 USD per barrel (USD/bbl) level. The ongoing strike of Norwegian workers also supported the price. The US light sweet oil (WTI) even outperformed its North Sea peer and gained more than 9.3 percent.
Today, however, the price of Brent is seen at 96 USD per barrel despite the fact that EU sanctions against Iran which took effect on Sunday triggered another wave of saber-rattling. Moreover, we expect that today’s eye-catcher, the ISM index, might surprise on the downside. This might further weigh on the price of oil.
Base metals prices rose across the board on Friday and the price of the three month copper (LME) was seen at the highest level in more than a month.
Today in early trading, metals give up some gains as weaker than expected China’s PMI weigh on sentiment. Both official and HSBC PMI deteriorated in June. The most worrying is the fact that new orders were falling at the highest pace so far in 2012 reflecting the slowdown in European and US as well as the domestic economy. At the time of writing, the price of copper is seen at 7650 USD per ton.