Also on commodity markets, disappointment about Bernanke’s speech was short-live

The front-month contract on Brent (ICE) posted further gains on Tuesday and the price thus grew in the fifth consecutive session. Meanwhile, the spread between the front-month and six month contract was barely changed at about 1.7 USD per barrel (USD/bbl). As we already pointed out, we believe that the main reason for the recent surge in time spreads is continuing decline in North Sea oil production which was amplified by Norwegian strike and more recently by expected maintenance at the key Buzzard field (which produces Forties grade, i.e. the part of BFOE benchmark).

Regarding yesterday’s highlight - speech of Fed’s Bernanke - the written text of the testimony brought no new information. The Fed is still prepared to take further action, but the Fed Chairman stopped short of any specific indications on whether and when this might happen. Markets of riskier assets were disappointed and oil thus dipped well below 103.50 USD/bbl in late afternoon. Despite the fact that the disappointment was rather short-lived, the price of oil is seen at 103.70 USD/bbl level at the time of writing.

Base Metals
Base metals prices slid down on Tuesday. Copper led losses and the three month forward fell back to 7600 USD per ton level after the speech of Fed’s Bernanke. Regarding LME stocks, cancelled warrants ratio remained above 20 percent in the fourth day in a row.