On Thursday, the oil price continued to drift lower and in intraday trading was even seen as low as below 104 USD per barrel (USD/bbl) level. This time, yet another downward revision of estimates of oil demand growth for this year by the International Energy Agency (IEA) weighed on prices. Although the IEA trimmed its forecast only marginally, it complemented similar revisions of the OPEC and US EIA and thus had a relatively distinct effect on prices.
Meanwhile, the spread between the front and the second-month contract fell to a new 9-1/2 month low as the supply/demand balance in the North Sea physical market remains favorable; Forties differential against Dated Brent has been in a negative territory for the longest period since the beginning of 2010. However, let us recall that this is to a certain extent caused by exceptionally heavy maintenance of European refineries (see the chart). Thus, a return from maintenance may support the price of oil in weeks ahead even though the BFOE loadings are expected to slightly increase in May.
The gold price is set to post losses in a third straight week. This week, the pressure on gold price intensified after the release of news that Cyprus is expected to sell a part of its gold reserves to help tackle its debt crisis and on unexpectedly hawkish minutes from the last Fed meeting. At the time of writing of this note, the gold price is hovering at 1555 USD per troy ounce.