Despite dipping below 110 USD per barrel (USD/bbl) in intraday trading, the front-month contract on Brent eventually settled just 0.2 percent lower at 111.04 USD/bbl on Monday. Today and tomorrow, the oil market will watch development of talks between the United States, Russia, China, France, Britain, Germany and Iran on Iranian nuclear program. Let us recall that due to its military potential, the USA levied heavy sanctions on oil exports from the country and the euro zone prohibited imports of Iranian oil. The current meeting will draw attention as it is the first one after Mr. Rouhani became Iranian President and is generally considered to be more moderate than his predecessor Ahmadinejad as he had indicated last month that the deal might be struck within three to six months.
In spite of more positive Rouhani’s rhetoric, we think that striking a deal which could lead to at least partial restart of exports of Iranian oil will remain difficult and we do not expect a major breakthrough in a relationship between the west and Iran this week.
Base metals saw mixed trading yesterday; copper gained 0.76 percent while aluminium price fell by 0.6 percent. Copper bounced off the support at 7163 USD per ton (USD/t) and returned above 7200 USD/t. The metal remains well-bid today although (31,82 GBP, 3,16%) said its copper output soared by 23 percent Y/Y and 11 percent Q/Q in the third quarter. The company’s report thus supports our medium-term bearish outlook for copper prices. We believe the price may return below 7000 USD/t by the end of the year and for the first quarter 2014 we maintain our estimate of average price at 6700 USD/t.