Brent crude remained at elevated level on Monday although the risks of intervention in Syria remain uncertain. However, as we already argued, virtual loss of Libya’s oil production (according to Reuters, the country exports about 100 thousand barrels per day, i.e. less than one-tenth of normal levels) is, at least at the moment, more important than risks of strike against Syria. The fact that the oil market remains tight is visible in the short-end of the forward curve (ICE) which remains heavily backwardated.
Moreover, news that four September cargoes of Forties (a part of Dated Brent benchmark) have been delayed to October may add additional pressure on the timespreads in following days.
Copper continued to swing between gains and losses on Monday. This time, copper outperformed the rest of the base metals complex and added nearly two percent. Rather than any significant change in fundamentals, we think that short covering might have been a driver behind the recent rally (number of large speculators betting on decline in prices fell from 59 in the beginning of August to 32 in the end of the same month and Money Managers’ net position has turned into a positive territory). Therefore, our view towards the end of this year remains rather cautious and we expect average copper price in the fourth quarter to fall to 6800 USD/t.