Crude
Commodities markets ignored weaker U.S. data (consumer confidence) and focused mainly on rising optimism regarding a voting on austerity measures in Greece. U.S: dollar depreciation supported the price of oil, which grew by about 2.5 percent and Brent forward curve turned back into backwardation.
Today, markets will again focus mainly on Greece and its key voting on austerity reforms. In case of a positive vote, the question is how much of the defensive positioning is already scaled back after the rebound yesterday. Nevertheless, we believe that weaker U.S. dollar might further support the price of oil today.
Base Metals
Easing risk aversion and weaker U.S. dollar bolstered the price of base metals on Tuesday. Copper bounced off 9000 USD per ton (USD/t) level and today in early morning even touched 9150 USD/t, i.e. the highest level in about two weeks.
We think that copper price might stay close to current levels during summer (we estimate the average price of copper in Q3/2011 at 9250 USD/t). Nevertheless, we maintain our bullish medium-term outlook due to the expected physical shortages.
Precious Metals
Gold has been trading range-bound between 1490 and 1510 USD per troy ounce (USD/toz) so far this week.
In recent sessions, gold has been seeking a new impetus. We believe that a prospective approval of austerity measures in Greek parliament need not trigger gold sell-off. We maintain our view that the main risk for gold is an increase in U.S. interest rates.
