Brent crude largely ignored worse than expected US data and posted further strong gains on Thursday. The price of the front-month contract on Brent surged by more than 2.5 percent and therefore settled in sight of 108 USD per barrel (USD/bbl) level.
Despite the fact that the situation in Middle East might add some small risk premium to oil prices, we believe that the main reason for surge in price is expected low output of oil in North Sea which pushes the short-end of Brent forward curve (ICE) to relatively steep backwardation.
Base metals prices posted relatively strong gains on Thursday. Both LME copper and aluminium gained more than one percent and three month aluminium even outperformed its peers. Still, the price of aluminium is seen well below 2000 USD per ton level which is seen as breakeven point for many western smelters.