KBC Market Research Desk
KBC Bank
Crude
The international agreement, reached at the end of last week in Geneva, to avert a wider conflict in Ukraine was faltering already yesterday with pro-Moscow separatist gunmen showing no sign of surrendering government buildings they have seized. The price of oil thus remains supported and the front-month contract on Brent is trading at 110 USD/bbl at the time of writing of this note.
On the other hand, while the backwardation in the front-end of the forward curve (ICE) widened in the last couple of days (after the expiration of the May contract), it still remains at reasonable levels and indicates that quite calm situation in the market prevails; the spread between the front and second month contract is about 40 cents per barrel.
Base Metals
Nickel price (LME) hit a new fourteen-month high amid worries of tighter western sanctions imposed on Russia, a major refined-nickel producer, due to reluctance of pro-Russian protesters to fulfil the Geneva agreement reached last week. The metal already gained more than 30% since the end of the previous year and has by far outperformed the rest of base metals complex.
Meanwhile, the three-month copper has watched slowing Chinese economy and the price of the metal falls towards 6600 USD/t level in early trading after the Easter holiday. From this point of view, tomorrow’s flash PMI figures (HSBC/Markit) will be watched closely as the markets expect minor improvement vis-à-vis March reading of 48.0.
Chart of the day:
While the backwardation in the front-end of the forward curve (ICE) widened in the last couple of days (after the expiration of the May contract), it still remains at reasonable levels and indicates that quite calm situation in the market prevails…
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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