Brent outperformed the rest of commodities complex on Thursday. The front-month contract on Brent (ICE) gained about 0.8 percent and at the time of writing is seen above 101.50 USD per barrel (USD/bbl).
The price of oil might have been supported by news that the US heightened its action against Iran by identifying companies that export Iranian oil. Apart from that, oil production in North Sea is expected to reach one of the lowest levels in a history.
Supply worries have been thus again visible in the shape of the forward curve at ICE – spread between 1M and 2M contract widened to the highest level in about two months (see the chart).
Meanwhile, the International Energy Agency (IEA) released its Oil Market Report for July. The message of the report is in line with our view, i.e. that the slower economic growth could curb oil prices.
Moreover, unlike the US EIA, the IEA said that Saudi Arabia boosted oil production in June which is a good signal for stability of oil prices. However, IEA reminded that there was a risk of “nasty supply surprises”. We still believe that the price of oil might stay close to 100 USD per barrel level in the third quarter of this year.
LME copper closed broadly unchanged on Thursday at about 7550 USD per ton (USD/t) level. Over past three days, cash to 3M spread surged to the highest level since the end of May this year as stocks of the metal at LME remained flat and cancelled warrants ratio rose to about 14 percent. Regarding China’s data released today in early trading, it came out more or less in line with market expectations. Still, base metals post relatively solid gains.