Energy complex underperformed the rest of commodities amidst relatively sharp sell-off of risky assets on Monday. Brent crude (ICE) fell by more than 3.3 percent and therefore returned below 104 USD per barrel (USD/bbl) level. At the same time, spread between the front-month and longer dated contracts remained relatively high (see the chart) although Reuters reported that the situation in the physical market has recently somehow calmed due to higher supply of sweet light crude oil from Nigeria and Mediterranean area.
Today in early trading, slightly improved China’s flash HSBC PMI supported the price of oil. However, the fresh euro zone estimate fell short of expectations (again) and therefore dragged the price of oil back below 104 USD/bbl.
Base Metals
Base metals extended previous losses on Monday. The price of the three month contract on copper (LME) was therefore seen at the lowest level in three weeks. Today, China’s HSBC flash manufacturing PMI index rose in July to 49.5 from 48.2, its highest level since February, boosted by a pick-up in output and signs of improvement in new export orders. The figure has, however, rather negligible impact on the price of the red metal. Positive China’s reading was counterweighted by weaker than expected euro zone figure and copper is thus seen at 7420 USD per ton level at the time of writing.