On Thursday, the oil price rose by nearly three percent and erased the most of Wednesday’s losses. A combination of the ECB rate cut and better than expected weekly data from the US labor market supported the price in the afternoon and the front-month futures contract on Brent (ICE) settled at 102.85 USD per barrel (USD/bbl). Meanwhile, backwardation in the front-end of the Brent futures forward curve heightened due to a combination of North Sea supply issues and stronger demand for physical oil. The spread between the front and the second month contract hit a six-week high yesterday.
Base Metals
Unlike the rest of the base metals complex, copper price was buoyed by the ECB rate cut and better US initial claims data on Thursday and the three-month forward contract (LME) gained nearly one percent. Moreover, the red metal extends previous gains and the price is hovering at 7017 USD per ton (USD/t) resistance today in early trading.
Meanwhile, LME aluminium posted yet another loss yesterday and in intraday trading even hit a four-year low at 1809 USD/t. Just like the rest of the complex, however, the aluminium price posts rises today and at the time of writing of this note is seen at 1841 USD/t.
Precious Metals
Gold is hovering at resistance at 1478 USD per troy ounce (USD/toz) today after gaining after the ECB rate cut yesterday. Today, the eye-catcher is the US payrolls report for April. Although some pick-up can be expected from the poor March report, markets probably won’t be surprised if today’s data would come out slightly below the official consensus numbers (which our scenario as well). Thus, we expect the report to be rather neutral for the price of gold.