The oil price fell slightly on Monday; investors more or less ignored rising tensions between Sudan and South Sudan and focused more on weaker than expected outcome of China’s retail sales and restart of production at Buzzard field over the weekend might have weighed on Brent.
Regarding longer term view, US Energy Information Agency released its estimates of technically recoverable reserves of shale oil yesterday. According to the report, shale oil reserves in the US and 41 other countries represent 10% of world crude oil. Moreover, in case of natural gas, shale gas represents about one-third of world reserves. EIA study thus supports our bearish medium-term outlook for crude prices.
Base Metals
Copper price fell in a fourth consecutive session on Monday. The market has lately ignored supply issues at Indonesia’s Grasberg mine and focused more on weaker than expected China’s industrial production data for May.
At the same time, however, copper physical premiums have continued to grow so far this year, indicating lack of physical metal available to consumers. Let us recall that about 85 percent of LME copper stocks are located at three locations and high cancelled warrants ratio signals attempts to draw the metal out of storage.