On Monday, the front-month contract on Brent (ICE) settled barely changed at 111.40 USD per barrel. An interesting piece of data was released by the ICE; its Commitment of Traders report showed that the speculators raised bets on an increase in the price of oil last week. As a result, money managers’ (i.e., speculative) position is seen just shy below an all-time high hit last year in March (possibly a reflection of rebalancing of some commodity indices from WTI towards Brent).
We believe, however, that the current environment is not much supportive for the crude price in general and North Sea crude in particular. The vital demand for Forties (which is trading at the highest premium above Dated Brent since early March 2012) probably reflects rather arbitrage bookings (South Korea) as local refinery (NWE) margins are seen (according to Reuters data) at the lowest level since Q1/2012. Moreover, according to the North Sea loading programme for February,
BFOE loadings are expected to rise significantly in February and might hit the highest level since May 2012 (see the chart).
Base metals prices saw mostly a calm trading on Monday. The three-month aluminium erased some previous losses but the price of the metal is far below the 3-1/2 month high hit on 3rd January after the US fiscal deal had been struck. Technically, the next support is seen at 2043 USD per ton (USD/t) level. At the time of writing of this note, the metal is trading at 2050 USD/t.
The price of gold fell in the third consecutive session on Monday and as a result breached back below 200 days moving average. The price fall, however, spurred some demand in Asia which reflects, according to local traders quoted by Reuters, both the lower price and pre-holiday demand (Chinese Lunar New Year holiday starts on 11th February).