Brent slipped from a three-month high

On Thursday, Brent slipped from a three-month high and the front-month futures contract (ICE) settled at 107.7 USD per barrel (USD/bbl). Apart from worse than expected US initial jobless claims report, the revised outlook of the International Energy Agency weighed on Brent. The agency expects that so called “call on OPEC crude”, that is, the difference between world total consumption and non-OPEC production, will fall by 200 thousand barrels per day (bpd) to 29.4 million bpd next year. In other words, overall supply/demand conditions may ease further next year.

Although our medium term bearish opinion on the oil market remains intact, the price of oil may be kept higher (around current levels) in the short term not only by the tension in Egypt but also by a lower North Sea production in August, which may be augmented by a lower production in Nigeria and by possible higher exports of West African oil to the U.S. By contrast, declining margins of European refineries and a lower performance of the European economy should curb that pressure.

Base Metals

Copper rallied on Thursday after Fed’s Bernanke tried to calm market fears that monetary policy tightening will occur faster than expected hitherto. The three-month contract (LME) leapt to 7000 USD per ton (USD/t) in early morning and was trading in a relatively narrow range during the rest of the session. Apart from Mr. Bernanke’s words, comments of China’s Prime Minister Li Keqiang, who said that economic growth and employment must stay above certain level, might also have played a role, although only temporarily – today in early trading, the price of copper slips back below 7000 USD/t. Meanwhile, aluminium gained nearly one percent yesterday and even flirted with resistances around 1830 USD/t. At the time of writing of this note, however, the price of the metal is seen back below 1825 USD/t.