Crude
On Friday, Brent crude erased Thursday’s gains and the front-month contract closed below 110 USD per barrel (USD/bbl). Still, Brent crude gained almost 7% in October. At the same time, Brent forward curve flattened as the outlook for further economic development slightly improved (see the chart at page 2).
Today, UAE’s Oil Minister al-Hamli said that oil producers can tolerate a further fall in oil prices to 80 – 100 USD/bbl range which might indicate a stance of three gulf producers (UAE, Saudi Arabia, Kuwait) ahead of OPEC meeting scheduled for 14th December. Moreover, Nobuo Tanaka (a former IEA chief) reiterated his view that sustained Brent price over 100 USD/bbl will cause a similar damage to the global economy as in 2008.
As regards the latest CFTC Commitment of Traders (CoT) report, it showed an increased bullish stance of speculators towards US oil WTI. According to the report, net position leapt by 16% which was the highest weekly increase since early March 2011. As a result, the spread between Brent and WTI is currently hovering at the lowest levels since early July 2011 (see the chart).
Base Metals
On Friday, copper experienced rather calm session and posted only small gains. Still, the red metal gained more than 14% last week. Despite the weaker start of this quarter, we believe that the average price of copper might reach 7700 USD per ton in Q4/2011.
The latest CFTC CoT report showed an increased bullish stance of speculators towards US oil WTI. According to the report, net position leapt by 16% which was the highest weekly increase since early March 2011.
On Friday, WTI once again outperformed Brent and the spread between the two benchmarks dropped to 16.5 USD/bbl, which is the lowest value since early July 2011.
