Unlike the most of commodities, Brent price rose on Thursday and settled at 117.24 USD per barrel, i.e. at a five-month high. Today in early trading, Brent extends yesterday’s gains on better than expected Chinese data and its price is thus set to increase in a fourth consecutive week. Both Chinese exports and imports rose sharply in January, pointing to solid demand from abroad and domestic. Import of crude oil grew by 7.4 % Y/Y and at 5.92 million barrels per day (mbpd) was the third highest in a history. The figures should be, however, interpreted with caution as next week’s Chinese New Year could have caused some distortions.
Regarding yesterday’s news, Iran’s supreme authority Khamenei sharply refused an offer from the U.S. Vice President Biden to hold talks on Iranian nuclear programme. Khamenei’s words might have added some additional support to the oil price. According to EIA’s data, Iranian oil production fell by 0.95 mbpd in December 2012 and by 0.7 mbpd on average last year due to the sanctions against the regime.
Better than expected China’s data provided only limited support to base metals prices today in early morning and both copper and aluminium are seen just touch above yesterday’s settlement levels. LME copper price bounced off 8200 USD per ton (USD/t) level and at the time of writing of this note is seen at 8234 USD/t. China’s copper imports slightly increased in January in comparison with December, but year-on-year were 15 percent lower. China’s end-use demand for the red metal seems to be relatively comfortably covered by supply; this is signalled by both shape of ShFE forward curve and a negative price differential against LME price.