The price of the front-month contract on Brent (ICE) dipped even below 101 USD per barrel (USD/bbl) level yesterday in intraday trading and is set to post the largest weekly loss in last five weeks. Not only poor economic growth in Europe (after the data release in the middle of the month, the price dropped to two-week lows) but also the absence of typical seasonal increase in consumption of light products in this part of a year has had adverse effects on the price of North Sea oil so far this year. While demand has recovered since approximately mid-April, refining margins (in spite of their increase in recentdays) are not very high and thus have curbed any greater improvement of demand. Stocks of petrol on both sides of the Atlantic remain fairly high, even having climbed to the second highest level in the last 10 years on the U.S. East Coast, which is also a destination of a portion of production from European refineries.
Neither the return of some of the European refining capacity to the market after its production interruptions, nor June’s anticipated decline in North Sea oil production to nine-month lows, due to the scheduled maintenance of certain oilfields, is having any great impact on the market now.
Base Metals
As could have been expected after weak China’s May PMI, the base metals prices fell across the board on Thursday. The three-month copper (LME) led losses and its price fell by 2.34% while aluminium lost 1.75%.
Over the past two weeks, the price of copper showed no significant trend and more or less hovered around US$7,300/t, although it even hit two-week lows during the commented period (US$7,100/t). The price dropped to that level after the new Chinese Prime Minister, Li Keqiang, suggested that the Government was likely not planning any strong boost to the economy to curb its growth deceleration this year. By contrast, in recent days, the price of copper gained some support from the mining problems in the major Indonesian Grasberg mine, which overshadowed the lowest imports of the metal to China in the last 22 months.