On Thursday, the oil price eventually settled only barely changed at 102.19 USD per barrel although it had hit a one-week low in intraday trading. Quite curiously, Brent erased the most of its intraday losses after the release of EIA’s weekly figures on US oil & products inventories which showed an unexpected surge in US crude stockpiles (by 3 million barrels) – US commercial crude inventories thus hit the highest level in last 82 years. At the same time, however, US gasoline stocks fell more than expected which, somewhat surprisingly (as the US gasoline stocks are seen at high levels historically),
overshadowed the impact of large built in crude inventories.
Today, the market will focus on outcomes of Vienna’s OPEC meeting. As we already pointed out, we do not expect any changes in OPEC production quota of 30 million barrels of oil per day (mbpd). We expect that the cartel will rather focus on changing market environment that largely stems from boom in US tight oil production (and Canadian oil sands production) which makes the US less dependent on imports of Middle East and West African oil (for instance, the US imports of Nigerian oil were the lowest since 1986 last year). Moreover, discussions how OPEC would respond to prospective production cuts
(which members should participate) could be held, especially between Saudi and Iraqi officials. Let us recall that Iraq has seen the largest increase in oil production among the OPEC members as its supplies rose by more than 0.4 mbpd Y/Y in the first quarter of this year and is now the second-largest OPEC oil producer.
Base Metals
Copper price rose slightly while aluminium saw the largest daily gain in nearly a month on Thursday. Regarding copper, the price may be supported by news that a worker died on Friday in yet another mine accident at Grasberg copper mine in Indonesia which may halt the restart of production (which was announced few days ago). At the time of writing of this note, copper is trading at 7270 USD/t level.