Although Thursday saw some revival of North Sea physical oil market, gains of the front-month futures contract (ICE) as well as widening of the spread between the front and the second-month contract can be more likely attributed to short-covering ahead of the expiration of April futures contract. Apart from that, the oil price was particularly supported by an unexpected fall in US jobless claims last week.
Over the past four weeks, the spread between Brent and US light sweet oil (WTI) has been narrowing considerably and on Wednesday hit the lowest level since mid January 2013. Moreover, the US senate passed a bill on Thursday that would enable the Congress to approve a Keystone XL pipeline project that had been rejected by president Obama last year. The pipeline should bring oil from Canadian oil sands to US Gulf coast (PADD 3) region where the majority of US refining capacity is located and eventually might make the US less dependent on oil imports from OPEC countries. Apart from that, the new pipeline (if the bill was passed) could help to ease US Midwest oil glut and in medium term help the Brent-WTI spread to narrow further.
Base metals failed to benefit from improved global sentiment yesterday and both copper and aluminium posted only small gains. Not even upbeat report on US jobless claims provided much support to prices and copper thus failed to breach back above 200 days average at 7841 USD per ton (USD/t).
Gold is set to post gains in the second consecutive week although rising prices started to weigh on demand for the metal in the key Asian markets. According to Reuters, Chinese buyers were encouraged to buy more metal last week after it fell to seven-month low around mid February but recently put further purchases on hold as the price of the yellow metal drifted to 1590 USD/toz. Still, on a year-to-date basis, gold has outperformed both major base metals (copper and aluminium) and Brent oil (see the chart).