The price of the front-month contract on Brent (ICE) hit a one-month low on Monday. Apart from generally calmer situation in Syria, the expiration of the October contract on Friday exacerbated the fall of the front-month price (the price of November contract fell “only” by about 1.5%). Maybe the most importantly, news that part of Libya’s oil production is coming back could help ease market conditions in weeks ahead. According to the head of the Libyan parliament’s oil industry crisis group, production at fields El Feel and Sharara (of total 440 thousand barrels per day) has been restored as government succeeded in talks with striking workers.
On the other hand, news that Ekofisk (the second largest part of BFOE benchmark after Forties) loadings will face unplanned deferrals in weeks to come may prevent the oil price (and backwardation in the front-end of Brent forward curve) from easing more substantially. The spread between the front and the second month contract is still seen at heightened levels even after the expiration of October contract on Friday.
Base Metals
Copper and tin were the only base metals that benefited from positive market mood on Monday. The price of the threemonth contract on copper (LME) partially regained some ground after a sell-off in last couple of days and increased by more than 0.5% while the price of aluminium continued to slide down. More importantly, aluminium physical premiums have continued to drift lower in September indicating that long-present LME warehousing issues may improve in months to come.
This could, consequently, put additional downside pressure on the aluminium price.