Copper is set to post gains in the third out of four last weeks

On Thursday, the front-month contract on Brent gained about 0.4 percent and settled at 107.7 USD per barrel. Brent posted the most of its gains in the afternoon after the release of figures on US durable goods for June. The data showed much stronger increase than expected (4.2% vs. 1.4% M/M); the growth was, however, driven mainly by transportation. News that South Sudan’s oil output fell by about 100 thousand barrels per day compared to week ago was not particularly disturbing for markets. Let us recall that South Sudan has been in dispute with its northern neighbor over pipeline transaction fees as well as borders between the two countries.

Meanwhile, US WTI oil lagged behind its peer and gained only about 0.1% as Wednesday’s EIA Weekly Petroleum Status Report showed yet another strong US crude production figure for last week. According to EIA, US domestic oil production hit the highest level since December 1990. Nevertheless, as we already pointed out, the spread between Brent and WTI significantly tightened over past few weeks as infrastructure improved. On a year-to-date basis, WTI gained about 15% while the Brent price fell by more than 3%.

Base Metals
Copper is set to post gains in the third out of four last weeks, although the price of the three-month contract (LME) fell slightly yesterday. The price decline might have been a little surprise because China revealed its plan to reduce a part of copper producing capacity by about 650 thousand tonnes.

The question remains, though, how much of this capacity has been actually producing the metal and how much of it has been lying idle. In the first five months of this year, the world’s refined copper production actually grew by about 450 thousand tonnes, particularly due to rising production in Asia