The price of the front-month futures contract (ICE) for Brent oil remained below US$112 per barrel almost exclusively in the last fourteen days. Since the expiry of February’s contract in the middle of the month, the price of the front-month contract has increased by more than US$2 per barrel, primarily fuelled by good news from China and the United States. China’s GDP growth in the last quarter of the year, as well as figures from industry and the retail sector for December, were slightly better than expected. Good news came from the U.S. labour market – weekly unemployment benefits had fallen to the lowest level since the beginning of 2008.
Gasoil prices also rose during the monitored period; however, despite the fairly cold weather in Europe, demand remains rather muted, due to a strongly negative slope of the forward curve, which discourages buyers from a replenishment of stocks. The positive development of product prices had a favourable effect on refining margins and this, along with export demand, encouraged oil extraction in the North Sea. The situation remains relatively calmer than in early 2013, but the increasing market pressure of recent days has influenced the shape of the forward curve; the spread between the prices of one-month and three-month contracts rose by approximately 40 cents in the last five days.
Prices of base metals rose slightly on average in the last two weeks. The price of aluminium was able to remain above its support level of US$2,043/t, albeit purely fundamental news was not very favourable for the price developments. According to the latest monthly IAI report, the average daily aluminium production hit a new all-time high of 126,400t in December. For the whole of 2012, the global production was up by approximately 2.7%. Bear in mind that the aluminium market has been struggling with overproduction in the long term. The price of copper went up by 0.7% vis-a-vis that of two weeks ago. Market fundamentals continue to be more favourable for the copper price. According to the latest ICSG data, there was a surplus in the copper market in October 2012, but demand exceeded supply by 557,000t in the first ten months of last year (as opposed to 146,000t in 2011). Nevertheless, the overall picture continues to be distorted by large stocks of the metal in China’s bonded warehouses. The relative sufficiency of the metal is also signalled by positive slopes of the forward curves at both the LME and the Shanghai Exchange.